OTP Group announced the financial results for the third quarter of 2017 on Tuesday. According to the report published in Budapest, which presents the consolidated result adjusted in accordance with the Group reporting standards, OTP Bank Romania registered an after-tax profit of RON 30.8 M (EUR 6.8 M) in the first 9 months of the year, decreasing by 3% year over year. The bank returned to profit in the third quarter, with RON 18.3 M (EUR 4.0 M) earnings, after a loss of RON 6.6 M (EUR 1.4 M) registered in Q2.
In the first nine months of 2017, the operating profit surged by 33% year over year, as a result of lower operating expenses (-4%) and 8% increase in total income. On the other hand, the operating profit declined by 4% in the third quarter, due to higher administrative expenses.
Net interest income had a positive trend. It improved by 9% compared to the previous year, supported by increasing volume of performing loans. Total risk costs increased by 44% in the first nine months of 2017, due to higher provisions in the second quarter. However, the total provisions dropped by 65% in Q3 as a result of the base effect and favorable credit quality trends. Thus, ROE improved and exceeded 11% in Q3.
The FX-adjusted performing loans portfolio continued to grow in both the retail and corporate segments. Overall, the performing loans volumes increased by 11% year over year and by 4% quarter over quarter. The non-performing loans ratio was 15.5% at the end of Q3 (-2.3 percentage points year over year, -1.1 percentage points quarter over quarter), and the coverage ratio reached 82.5% (+1.4 percentage points year over year, -1.2 percentage points quarter over quarter). The FX-adjusted deposit volumes increased by 4% year over year, but stagnated quarter over quarter.
As for new loan disbursements, the cash loan sales improved by 17% year over year in local currency terms. The new disbursement of mortgage loans declined after the strong Q2, however it improved by 80% in local currency in the first nine months year over year.
According to local regulation the Bank’s standalone capital adequacy ratio stood at 15.7% at the end of 3Q 2017.
OTP Group posted an adjusted after-tax profit of RON 1.2 bn for the third quarter of 2017, leading to a profit of RON 3.3 bn in the last nine months and a significant increase of 33% year over year. At the end of Q3 2017 the Group’ liquidity was stable: liquidity reserves comprised RON 36.8 bn (EUR 7.9 bn). The quarter over quarter RON 10.4 mn increase was related to the liquidity generation by the business lines across the Group.