OTP Group announces the financial results for the first half of 2022. According to the report published in Budapest, which presents the consolidated results adjusted by the Group´s standards, OTP Bank Romania has registered a RON 14 million loss during the first semester of 2022, a result shaped mainly by the higher total risk provisions.
Operating profit in the first six months of 2022 reached RON 86 million, doubling compared to the same interval of 2021, with a positive jaw effect following a dynamic 22% surge in total revenues partially offset by a +10% increase in operational expenses.
Within that, net interest income grew by 35% y-o-y, and net fees and commissions increased by 9%, whilst for operating expenses, the increase is mainly due to the investments made within the frame of the growth strategy of the bank that determined the increase y-o-y of the IT spending and a 2% increase of the average number of employees and to higher contribution paid to deposit insurance fund and resolution fund in 2022.
“First half of this year imposed, again, extraordinary conditions for the entire economy, with a macroeconomic and geopolitical context in constant flux. We have been in direct contact with the market, and we have followed closely the banking sector evolution, to provide best-in-class services and an attractive offer for our clients. So, for OTP Bank it has been another six months of development, constant investments, and organizational transformation, which in turn brought incremental improvement in our operations and operational results. All our planned investments are on track, and we are engaged in our development projects, for both team growth and operational improvements.” said Gyula Fatér, CEO of OTP Bank Romania
The net interest income increased by 35%, to a total of RON 313 million. The annual dynamic benefited from the expansion of performing (Stage 1+2) loan volumes (+23% y-o-y), and the 35-bps y-o-y improvement in net interest margin, fuelled by the rising trend of the three-month interbank lending rate (which is the benchmark for corporate loans).
In the first six months, the total risk cost amounted to RON -93 million, driven by a credit risk cost of RON -59 million, due to the increase of the loan portfolio but also due to the declining outlook for certain economic sectors. The provisions for other risks, amounting to RON -34 million, are due to an extraordinary provision for an operational risk event amounting to RON -28 million.
The performing loan volumes increased by 23% y-o-y in the first half of 2022, which is supported mainly by the growth of corporate loans, while mortgage loans also increased by 17%. The rise of corporate loans by 111% is a consequence of the change in the definition of MSE and corporate segments in Q3 2021.
FX-adjusted deposit volumes increased by 2% compared to the second quarter of last year. The rise of corporate deposits by 66% is a consequence of the change in the definition of MSE and corporate segments in Q3 2021. The net loan-to-deposit ratio grew by 23 PPS y-o-y, to 137% (+12 PPS q-o-q).
According to local reporting standards, the bank´s assets reached the level of RON 19,78 billion, increasing by 24% compared to June 2021.
The bank's capital adequacy ratio reached the level of 20.02% (-2.13 pp y-o-y) under the background of assets growth.
In the first six months of 2022, OTP Group registered a consolidated adjusted after-tax profit of HUF 251 billion (RON 3,306 million) while the consolidated profit after tax was HUF 43 billion (RON 562 million).
Profit contribution of OTP Core – Hungary (HUF 169 billion / RON 2,227 million), DSK Bank in Bulgaria (HUF 50 billion / RON 654 million), the Croatian operation (HUF 23 billion, RON 302 million), the Serbian (HUF 22 billion / RON 287 million), the Slovenian (HUF 10 billion / RON 128 million) the Ukrainian (HUF -34 billion / RON -452 million), the Russian (HUF -15 billion / RON 195 million), the Montenegro operation (HUF 0.3 billion / RON 4 million), the Moldavian subsidiary (HUF 2 billion / RON 29 million) and Albanian subsidiary (HUF 5 billion / RON 63 million),
Photo credit: OTP Bank