Hungarian bank OTP reported on Friday a slight decline in profit and revenue in the third quarter under pressure from lower interest income while risk costs were reduced by more than three quarters. The bank closed the third quarter with a consolidated after-tax profit of 69.8 billion forints (225.4 million euros). In the same period last year, it operated with an after-tax loss of 3.66 billion forints.
Adjusted for expected changes in corporate taxes related to the transition to International Financial Reporting Standards (IFRS) in 2017 and for the positive impact of investments in Ukraine on tax liabilities, the consolidated after-tax profit in the third quarter amounted to 68.8 billion forints and nearly doubled year-on-year. Operating profit decreased by ten percent in the third quarter, to 86.61 billion forints.
Total revenues slid three percent, to 184.85 billion forints. They were hindered by five percent lower net interest income year-on-year, amounting to 130.66 billion forints. Net fee and commission income rose seven percent, to 45.41 billion forints. Total risk costs were reduced by more than three quarters, to 12.78 billion forints.
The capital adequacy ratio (CET1), calculated according to the planned stricter Basel III regulations, was 13.2 percent at the end of the third quarter and decreased by 0.3 percentage points compared to the end of last September. The share of foreign subsidiaries in profit fell to 42 percent, down from 45 percent in the previous quarter. In the second quarter of last year, their contribution was negative, reflected in a loss of more than two billion forints.
