Raiffeisen Bank Hungary posted a EUR57m profit in Q1-Q3, falling by 38.7% y/y, the Austrian parent RBI reported. The deterioration was on account of lower releases of impairment loss provisions, which is a common trend for the Hungarian banking sector this year due to high base effects. Provision releases were still relatively high at EUR19m, which the bank explained with successful collection activity and increased mortgage collateral valuations. On the other hand, operating profit of Raiffeisen Bank Hungary rose slightly by 4.5% y/y for the period, reflecting expenditure savings. The bank managed to cut its general administrative expenses by 7.8% y/y, partly on the back of lower IT expenses.
Total operating income fell by 3.3% y/y to EUR175m in Q1-Q3. The decline was due to higher negative other net operating income due to the deconsolidation of a real estate fund, the bank said. Net interest income was also lower y/y on account of low interest rates. This was partly offset by slight increase in net trading income net income from fees and commissions, possibly on the back of rising business volumes, in our view.
The loan portfolio of the Raiffeisen Bank Hungary expanded by 12.5% y/y. NPLs represented a 6.3% share in the total loan stock, down by 3pps y/y. The loan expansion was financed out of deposits and the loan-to-deposit ratio fell to 66.7% at end-Q3. Total assets amounted to EUR7,150m and rose by 0.7% y/y. Raiffeisen Bank Hungary was the fifth largest bank in Hungary in terms of total asset volume as of end-2017.