OTP Group announces the financial results for the first three quarters of 2020. This year’s activity has been transformed and strongly influenced by the effects of the Covid-19 pandemic, and the banking industry is one of the first to respond to the support and financing of the local economy. OTP Bank records positive operating results, growth in the lending and saving areas, and a healthy profitability for the current context.
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 39 million during the first nine months of the year, lower than the result of the the same period last year, due to higher expected risk costs in the context of the Covid-19 pandemic. Most of the provisions to cover these risks have been in place since the first quarter of the year.
“Given the pandemic situation, we chose at the end of the first quarter to move forward with what we started in 2019, the Apollo organic development strategy. We keep investing, we hired 200 new colleagues this year and have developed new services, such as fully online account opening for new customers, but we also take into account the current risks. Therefore, we have allocated resources to cover the potential risk, which will ultimately be reflected in the profitability parameter, in order to be able to perform in the market and finance the local economy”, said Gyula Fatér, CEO OTP Bank România.
Operating profit of the first nine months of the year reached RON 136 million, following the increase of 11% in total income, compared to the same time frame of last year; at the same time, operating expenses grew by 19% y-o-y, stemmed from higher IT expenses, as a result of the concentrated efforts for the digitalization of the services, as well as an increase in personnel expenses; most the latter was caused by the overall wage inflation, as well as a 16% y-o-y surge in the average number of employees.
The net interest income improved by 12% y-o-y to a total of RON 337 million being supported by a solid advance of the performing loan portfolio.
The performing loan volumes increased by 16% y-o-y, supported by the demand increase for real estate loans, the need for financing from local SMEs, to whose financing the IMM Invest program has massively contributed, and corporate, which increased by 10% from year to year.
Lending activity was atypical in the first 9 months of the year as effect of Covid-19 pandemic; after the dynamic increase in the first quarter followed the slowdown of economic activity in April-May and then the bounce back starting June.
FX-adjusted deposit volumes increased by 19% y-o-y. The dynamic has been fuelled by three business lines: Retail (+22%), SME (+4%) and Corporate (+34%).
According to local regulations, the Bank´s standalone total assets posted RON 14.2 billion, increasing by 14% compared to the end of September 2019, while the after-tax profit was of RON 9 million.
The bank’s capital adequacy ratio rose to 20.9%, compared to 20.5% in the first nine months of last year. The increase is due to the positive effects of the change in the European regulatory framework in the context of the pandemic.
In the first nine months of 2020, OTP Group has registered an adjusted after-tax profit of HUF 232 billion (RON 3,214 million). These results are the effect of increased risk costs due to the negative consequences of the COVID-19 pandemic.The consolidated accounting profit was HUF 188 billion (RON 2,610 million).
Profit contribution of OTP Core – Hungary (HUF 108 billion / RON 1,497 million), DSK Bank in Bulgaria (HUF 34 billion / RON 475 million), the Croatian operation (HUF 15 billion, RON 207 million), the Ukrainian (HUF 22 billion / RON 300 million), the Serbian (HUF 10 billion / RON 144 million) and Russian subsidiaries (HUF 12 billion / RON 165 million).
OTP Bank Romania, a subsidiary of OTP Group, is an integrated and self-financed provider of financial services. With an approach defined by responsibility, commitment and professionalism, OTP Bank Romania understands the needs of clients and the current context of the market and is a trusted partner in the provision of financial services. The bank ranks 9th in terms of assets in the ranking of banking players in Romania, as of December 2018.
OTP Group has more than 70 years of activity in the financial sector in Central and Eastern Europe, while the Romanian subsidiary has marked 16 years of presence in the local market. Promoting innovation, stable growth and integrated financial services, OTP Group has become a dominant player in the Central and Eastern European market and is considered an important banking group even on a European scale. The community of about 36 thousand employees serves nearly 19 million customers daily in 12 countries.