Net profit of the largest Hungarian bank, OTP Bank, amounted to HUF89.5bn and rose by 11% y/y in Q2, the bank reported on the Budapest Stock Exchange. Its cumulative profit reached HUF154,570bn in H1 and increased by 16% y/y. The improvement in the profit in Q2 was due to lower one-off costs, which were related to a share swap deal with oil and gas group MOL. Otherwise, operating profit rose by just 1% y/y, constrained by strong increase in operating expenditures. Operating spending was boosted by rising staff and wage hikes in April, the bank explained.
Operating revenues increased by 8% y/y in Q2, supported by a 7% y/y increase in net interest income. The growth of net interest income was partly on account of calendar effects and partly because of loan volume growth, OTP said. Net income from fees and commissions also rose by 6% y/y and other net non-interest income surged on the back of higher forex trade gains during the quarter.
Total assets of OTP Bank expanded by 17% y/y to HUF14,213.4bn at end-Q2. Asset growth was funded partly by customer deposits. The forex-adjusted deposit base rose strongly by 14% y/y and we think the non-adjusted increase was likely even higher, given the y/y depreciation of the forint. The adjusted loan portfolio also expanded by 15% y/y, which represented organic growth mainly driven by corporate lending. Lending to households continued to accelerate as well, OTP said.
Capital adequacy of OTP stood at 16.5% at end-Q2 and rose by 0.3pps y/y. Tier1 capital adequacy was 14.6% and improved by 0.5pps y/y.