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Bucharest
June 18, 2021
BUSINESS BUSINESS COMPANIES ECONOMY FINANCE&BANKING

OTP Bank Romania announces the financial results for the first quarter of 2021

  • Q1 2021 resulted as planned for OTP Bank Romania.
  • Performing loan volumes increased by 14% y-o-y, supported by mortgage, SME’s and corporate lending.
  • Deposits increased by 31%, fuelled by Retail. SME’s and Corporate business lines.
  • After tax profit of RON 7 million.
  • Operating profit reached RON 8 million, lower than the base period, following a 26% increase in operating expenses.

 

OTP Group announces the financial results for the first three months of 2021. According to the report published in Budapest, which presents the consolidated results adjusted in accordance with the Group´s standards, OTP Bank Romania has registered an after tax profit of RON 7 million during the first quarter of 2021, marking a solid increase compared to the first quarter of last year, when a loss of 11 million lei was recorded, as a result of supplementing by 48 million the risk costs in the context of COVID-19.

“We are now in full deployment of our organic growth program, implementing new projects and developing new products and services, while in the first three months we have marked steady double digit growth on our loans and deposits portfolios, as in our customer numbers. These are encouraging results, which show the effect of our Q1 investment program, the large capital increase at the beginning of the year, and other important development, such of the expansion of our branch network with a new centre in Timișoara, or the launch of new products, as the fully online personal loan”, said Gyula Fatér, CEO OTP Bank Romania.

Operating profit in Q1 2021 reached RON 8 million, on a downward trend compared to the same period in 2020, because of the increase in operating expenses, which grew by 26%. Aside from the higher mandatory costs such as the fee paid to the Deposit Guarantee and Resolution Fund, the operating expenses are higher following the investments and costs incurred in 2020 as per the Growth Program.

The Growth Program continues into 2021, carrying over additional FTE (12% y-oy increase in average headcount) as well as running costs for investments and developments finalized in 2020. This year the bank continued its investments, with new IT and digital programs meant to increase efficiency.

The net interest income decreased by only 2%, to a total of RON 112 million, being maintained by the dynamic expansion of performing loans but eroded by the net interest margin that decreased, on lower ROBOR and IRCC reference rates, with more emphasis on the credit side than on the deposit side.

In the first quarter, total risk cost amounted to +RON 3.8 million, owing to lower credit risk costs than in the base periods and the release of provisions for litigations (one-off large case).

The performing loan volumes increased by 14% in the first quarter of 2021, being supported by housing loans + 14%, the SME segment + 17%, while the corporate segment contributed with a 10% increase from year to year.

FX-adjusted deposit volumes increased by 31% compared to the first three months of last year, with a dynamic fuelled by both Retail (+24%), SME’s and Micro enterprises (+28%) and Corporate (+51%) business lines.

According to local reporting standards, the bank´s assets reached the level of RON 15.6 billion, increasing by 18% compared to March 2020.

The bank’s capital adequacy ratio increased at a comfortable level of 22.7% (+3.8 pp y-o-y), following the 250 million lei capital increase received from the Group in March.

In the first three months of 2021, OTP Group has registered an adjusted after-tax profit of HUF 117 billion (RON 1,584 million) and the consolidated accounting profit was HUF 93 billion (RON 1,260 million).

Profit contribution of OTP Core – Hungary (HUF 56 billion / RON 756 million), DSK Bank in Bulgaria (HUF 18 billion / RON 247 million), the Croatian operation (HUF 5 billion, RON 69 million), the Ukrainian (HUF 8.8 billion / RON 119 million), the Serbian (HUF 6.8 billion / RON 91 million),  the Russian  (HUF 8 billion / RON 108 million), the Montenegro operation (HUF 2 billion / RON 27 million), the Moldavian subsidiary (HUF 1.5 billion / RON 20 million) and Albanian subsidiary (HUF 1 billion / RON 14 million),

The full results of OTP Bank Romania are presented in the table below.

 

Main components of P&L account
in RON mn
1Q 2020 4Q 2020 1Q 2021 Q-o-Q Y-o-Y
After tax profit without the effect of adjustments -11 -17 7 -143% -167%
Income tax 7 2 -5 -308% -172%
Profit before income tax -18 -19 12 -163% -169%
Operating profit 36 27 8 -69% -77%
Total income 147 153 148 -3% 0%
Net interest income 114 114 112 -2% -2%
Net fees and commissions 13 15 13 -9% 6%
Other net non-interest income 20 24 22 -8% 9%
Operating expenses -111 -126 -139 11% 26%
Total provisions -54 -46 4 -108% -107%
Provision for impairment on loan and placement losses -56 -38 -19 -50% -65%
Other provision 2 -7 23 -409%  
Main components of balance sheet
closing balances in RON mn
1Q 2020 4Q 2020 1Q 2021 Q-o-Q Y-o-Y
Total assets 13,800 15,502 16,340 5% 18%
Gross customer loans 10,578 11,487 11,894 4% 12%
Gross customer loans (FX-adjusted) 10,628 11,525 11,894 3% 12%
Stage 1+2 customer loans (FX-adjusted) 9,867 10,775 11,166 4% 13%
Retail loans 6,709 7,381 7,643 4% 14%
Corporate loans 2,719 2,888 2,981 3% 10%
Leasing 440 506 542 7% 23%
Allowances for possible loan losses -623 -642 -642 0% 3%
Allowances for possible loan losses (FX-adjusted) -625 -644 -642 0% 3%
Deposits from customers 7,692 9,469 10,111 7% 31%
Deposits from customers (FX-adjusted) 7,722 9,528 10,111 6% 31%
Retail deposits 5,951 6,803 7,451 10% 25%
Corporate deposits 1,771 2,724 2,660 -2% 50%
Liabilities to credit institutions 3,942 3,789 3,709 -2% -6%
Total shareholders’ equity 1,646 1,701 1,959 15% 19%
Loan Quality 1Q 2020 4Q 2020 1Q 2021 Q-o-Q Y-o-Y
Stage 1 loan volume under IFRS 9 (in RON million) 8,739 9,210 9,801 6% 12%
Stage 1 loans under IFRS 9/gross customer loans 82.6% 80.2% 82.4% 2.2%p -0.2%p
Own coverage of Stage 1 loans under IFRS 9 1.6% 1.0% 1.0% 0.0%p -0.6%p
Stage 2 loan volume under IFRS 9 (in RON million) 1,080 1,528 1,365 -11% 26%
Stage 2 loans under IFRS 9/gross customer loans 10.2% 13.3% 11.5% -1.8%p 1.3%p
Own coverage of Stage 2 loans under IFRS 9 7.0% 9.0% 9.9% 0.8%p 2.9%p
Stage 3 loan volume under IFRS 9 (in RON million) 759 748 728 -3% -4%
Stage 3 loans under IFRS 9/gross customer loans 7.2% 6.5% 6.1% -0.4%p -1.1%p
Own coverage of Stage 3 loans under IFRS 9 53.7% 54.6% 56.0% 1.4%p 2.4%p
Provision for impairment on loan and placement losses/average gross loans 2.16% 1.34% 0.67% -0.67% -1.49%
90+ days past due loan volume (in RON million) 504 516 477 -8% -5%
90+ days past due loans/gross customer loans 4.8% 4.5% 4.0% -0.5%p -0.8%p
Performance Indicators 1Q 2020 4Q 2020 1Q 2021 Q-o-Q Y-o-Y
ROA -0.3% -0.4% 0.2% 0.6%p 0.5%p
ROE -2.6% -3.9% 1.7% 5.5%p 4.2%p
Total income margin 4.29% 4.01% 3.75% -0.26%p -0.54%p
Net interest margin 3.33% 3.00% 2.86% -0.14%p -0.48%p
Operating costs / Average assets 3.23% 3.31% 3.54% 0.24%p 0.31%p
Cost/income ratio 75.3% 82.5% 94.4% 11.9%p 19.1%p
Net loans to deposits (FX-adjusted) 130% 114% 111% -3%p -18%p
FX rates (in HUF) 1Q 2020 4Q 2020 1Q 2021 Q-o-Q Y-o-Y
HUF/RON (closing) 74.4 75.0 73.8 -2% -1%
HUF/RON (average) 70.6 74.0 74.1 0% 5%

 

The full report published by OTP Bank Plc. is available here: https://www.otpbank.hu/static/portal/sw/file/2021_1Q_conference_call_final.pdf

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