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Bucharest
August 13, 2022
BUSINESSBUSINESSCOMPANIESECONOMYFINANCE&BANKING

OTP Bank Romania announces the financial results for the first nine months of 2021

  • Business activity, sales and volumes grew dynamically, in accordance with the Bank’s strategy;
  • New sales of new cash loans surged by 59% y-o-y in the third quarter;
  • Mortgage loan sales grew by 30% y-o-y and 16% q-o-q;
  • The net interest income increased by 8%, to a total of RON 363 million;
  • In the first nine months after tax profit reached 14 million lei;
  • Deposits volumes grew by 28% compared to the same period last year;

 

OTP Group has announced  the financial results for the first nine 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 14 million during the first nine months of 2021, lower than the result of the the same period last year. The decline occurred due to a 23% growth in operating expenses.

Operating profit in the first nine months of the year reached RON 87 million, on a downward trend compared to the same time frame of last year, mainly because of a 23% increase in operating expenses. The higher costs stemmed from the bank’s growth strategy launched in 2019, higher personnel expenses following a 10% y-o-y growth of the average number of employees in the first three quarters. At the same time, in the third quarter the operating profit grew 29% compared to the previous trimester after a 7% increase in total income.

“First nine months are a picture of OTP Bank’s development journey, as we are engaged in our Apollo growth strategy and several transformational programs. We also keep investing in increasing our digital and physical footprint and report steady growth in lending and saving activities on our main focus business lines. All these actions imply a lot of spending for our core projects, an overall team growth, and coupled with the necessary risk provisioning, it is all reflected in the profitability parameter. It is a factor we can put on hold while envisioning a long term result, increasing our customer base, and developing great financing stories in the local economy. In this context, we are expecting for new losses considering the risk provisions that we will consider as an additional safety measure.”, said Gyula Fatér, CEO OTP Bank Romania.

 The net interest income increased by 8%, to a total of RON 363 million. The dynamic was supported by the sustained growth of performing loan volumes, while mitigated by a slight reduction of net interest margins.

In the third quarter total risk cost amounted to RON 50 million, owing to additional loan provisioning made for Stage 1 and Stage 2 volumes. Overall, in the first nine months of the year, total risk cost reached RON 61 million.

The performing loan volumes increased by 20% in the first nine months of 2021, being supported by increases in all the business areas. In the third quarter, group level definitions were introduced for MSE and corporate loans. As a result, some volumes were reclassified between the two categories in 3Q. Overall, MSE and corporate loan volumes grew by 11% q-o-q.

Deposit volumes increased by 28% compared to the first nine months of last year. As it follows, the loan-to-deposit ratio improved by 9 bps y-o-y to 117%.

According to local reporting standards, the bank´s assets reached the level of RON 17.5 billion, increasing by 23% compared to the level recorded in the first nine months of 2020.

The bank’s capital adequacy ratio stays at a comfortable level of 20.8% (-16 bps y-o-y).

In the first three quarters of 2021, OTP Group has registered an adjusted after-tax profit of HUF 373.6 billion (RON 5,146 million) and the consolidated accounting profit was HUF 335.3 billion (RON 4,619 million).

Profit contribution of OTP Core – Hungary (HUF 167.5 billion / RON 2,307 million), DSK Bank in Bulgaria (HUF 66 billion / RON 910million), the Croatian operation (HUF 25.2 billion, RON 347million), the Ukrainian (HUF 28.8 billion / RON 397 million), the Serbian (HUF 20.7 billion / RON 285 million), OTP Slovenia (HUF 12.4 billion / RON 172 million), the Russian (HUF 24.2 billion / RON 333 million), the Montenegro operation (HUF 5.4 billion / RON 74 million), the Moldavian subsidiary (HUF 4.4 billion / RON 60 million) and Albanian subsidiary (HUF 3.9 billion / RON 54 million),

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

Main components of P&L account
in RON mn
9M 2020 9M 2021 Y-o-Y 3Q 2020 2Q 2021 3Q 2021 Q-o-Q Y-o-Y
After tax profit without the effect of adjustments 39 14 -65% 22 17 -11 -163% -149%
Income tax -1 -13   -2 -3 -5 62% 237%
Profit before income tax 40 27 -33% 24 20 -6 -128% -124%
Operating profit 136 87 -36% 44 35 45 29% 1%
Total income 450 474 5% 149 158 168 7% 13%
Net interest income 337 363 8% 111 120 131 9% 18%
Net fees and commissions 38 41 8% 12 15 13 -16% 7%
Other net non-interest income 75 70 -8% 26 23 25 8% -6%
Operating expenses -314 -386 23% -105 -123 -124 1% 18%
Total provisions -96 -61 -37% -20 -14 -50 259% 149%
Provision for impairment on loan and placement losses -69 -84 22% -12 -17 -48 192% 311%
Other provision -27 24 -187% -8 3 -2 -181% -76%
Main components of balance sheet
closing balances in RON mn
2020 9M 2021 YTD 3Q 2020 2Q 2021 3Q 2021 Q-o-Q Y-o-Y
Total assets 15,502 18,193 17% 14,821 16,682 18,193 9% 23%
Gross customer loans 11,487 13,352 16% 11,267 12,467 13,352 7% 18%
Gross customer loans (FX-adjusted) 11,551 13,352 16% 11,325 12,487 13,352 7% 18%
Stage 1+2 customer loans (FX-adjusted) 10,797 12,618 17% 10,549 11,743 12,618 7% 20%
Retail loans 7,394 6,448 -13% 7,256 8,069 6,448 -20% -11%
Corporate loans 2,895 5,566 92% 2,805 3,092 5,566 80% 98%
Leasing 508 604 19% 488 583 604 4% 24%
Allowances for possible loan losses -642 -714 11% -632 -665 -714 7% 13%
Allowances for possible loan losses (FX-adjusted) -647 -714 10% -635 -667 -714 7% 12%
Deposits from customers 9,469 10,791 14% 8,440 10,360 10,791 4% 28%
Deposits from customers (FX-adjusted) 9,551 10,791 13% 8,492 10,370 10,791 4% 27%
Retail deposits 6,822 5,701 -16% 6,170 7,646 5,701 -25% -8%
Corporate deposits 2,729 5,089 86% 2,321 2,724 5,089 87% 119%
Liabilities to credit institutions 3,789 4,860 28% 4,119 3,848 4,860 26% 18%
Total shareholders’ equity 1,701 1,968 16% 1,710 1,980 1,968 -1% 15%
Loan Quality 9M 2020 9M 2021 Y-o-Y 3Q 2020 2Q 2021 3Q 2021 Q-o-Q Y-o-Y
Stage 1 loan volume under IFRS 9 (in RON million) 9,026 11,340 26% 9,026 10,488 11,340 8% 26%
Stage 1 loans under IFRS 9/gross customer loans 80.1% 84.9% 4.8%p 80.1% 84.1% 84.9% 0.8%p 4.8%p
Own coverage of Stage 1 loans under IFRS 9 0.9% 1.1% 0.2%p 0.9% 1.0% 1.1% 0.1%p 0.2%p
Stage 2 loan volume under IFRS 9 (in RON million) 1,470 1,279 -13% 1,470 1,237 1,279 3% -13%
Stage 2 loans under IFRS 9/gross customer loans 13.0% 9.6% -3.5%p 13.0% 9.9% 9.6% -0.3%p -3.5%p
Own coverage of Stage 2 loans under IFRS 9 9.6% 12.2% 2.7%p 9.6% 10.3% 12.2% 2.0%p 2.7%p
Stage 3 loan volume under IFRS 9 (in RON million) 772 733 -5% 772 742 733 -1% -5%
Stage 3 loans under IFRS 9/gross customer loans 6.8% 5.5% -1.4%p 6.8% 6.0% 5.5% -0.5%p -1.4%p
Own coverage of Stage 3 loans under IFRS 9 53.3% 58.5% 5.2%p 53.3% 57.8% 58.5% 0.7%p 5.2%p
Provision for impairment on loan and placement losses/average gross loans 0.86% 0.92% 0.06% 0.43% 0.55% 1.48% 0.93% 1.06%
90+ days past due loan volume (in RON million) 582 477 -18% 582 484 477 -2% -18%
90+ days past due loans/gross customer loans 5.2% 3.6% -1.6%p 5.2% 3.9% 3.6% -0.3%p -1.6%p
Performance Indicators 9M 2020 9M 2021 Y-o-Y 3Q 2020 2Q 2021 3Q 2021 Q-o-Q Y-o-Y
ROA 0.4% 0.1% -0.3%p 0.6% 0.4% -0.2% -0.7%p -0.9%p
ROE 3.1% 1.0% -2.1%p 5.3% 3.5% -2.2% -5.7%p -7.5%p
Total income margin 4.27% 3.81% -0.46%p 4.10% 3.83% 3.83% 0.00%p -0.27%p
Net interest margin 3.20% 2.92% -0.28%p 3.05% 2.91% 2.98% 0.07%p -0.07%p
Operating costs / Average assets 2.98% 3.10% 0.13%p 2.89% 2.99% 2.82% -0.17%p -0.07%p
Cost/income ratio 69.7% 81.6% 11.8%p 70.4% 78.1% 73.5% -4.6%p 3.1%p
Net loans to deposits (FX-adjusted) 126% 117% -9%p 126% 114% 117% 3%p -9%p
FX rates (in HUF) 9M 2020 9M 2021 Y-o-Y 3Q 2020 2Q 2021 3Q 2021 Q-o-Q Y-o-Y
HUF/RON (closing) 74.9 72.9 -3% 74.9 71.4 72.9 2% -3%
HUF/RON (average) 72.1 72.6 1% 72.9 72.1 71.7 0% -2%

 

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