OTP Group - 2020 - first half results

26 Aug 2020
Liquidity and capital position remain stable, all capital ratios well above the regulatory requirements
Supporting the medical sector despite the economic consequences of the pandemic
 
OTP Group closed the second quarter with a consolidated profit of HUF 78.7 billion after tax. This result is lower compared to the same period last year, but is 19% higher than the preliminary estimates of analysts. 
As expected, the results of the second quarter of 2020 reflect the impact of the unprecedented economic and health crisis caused by Covid-19. Profit after tax was determined by the increase in operating expenses (+ 16%), coupled with an increase in risk costs (approximately HUF 92 billion), largely due to the new accounting rules, which require the anticipation of provisions for future losses according to different economic scenarios.
 
The consolidated accounting profit for the first six months was HUF 74.6 billion.
In the first half of the year, OTP Group recorded HUF 258.2 billion consolidated operating income (+ 11% annually). Semi-annual total income increased dynamically (+14% annually) with net interest income increasing by 18% year-to-year. Net fees and commissions income grew by a slower pace (+9%, respectively) and other net non-interest income declined by 10% y-o-y. 
 
In 1H operational expenses nominally surged by 16% y-o-y, however adjusted by the acquisitions (2Q 2019: the Albanian subsidiary, 2H 2019: the Montenegrin, Moldavian, Serbian and from January 2020 the Slovenian subsidiaries) the FX-adjusted expense growth would be only 2.6% y-o-y.
 
The Group’s liquidity position remained stable and strong, at the end of the second quarter of 2020, the gross operative liquidity reserves of the Group comprised EUR 6.4 billion equivalent. 
 
The Group's capital position is safe, at the end of June 2020 the consolidated CET1 rate was the same as in the previous quarter at 13.9% at the end of 2Q, well above the regulatory minimum requirement (9.7%). 9.7%.
The operation of the Group was smooth even during the epidemic situation, all the 12 international subsidiaries took part in the fight against COVID-19 and have shown solidarity in overcoming the state of health emergency in their countries. The acquisition of protective equipment necessary for work at home, as well as the total value of donations and subsidies exceeded HUF 3 billion at group level by the end of June 2020.
 
In this highly challenging period OTP Group - of which Mobiasbanca - OTP Group is part - focused on the importance of prompt involvement, have been aware of local needs and put its shoulder to the consolidation of healthcare sector and education institutions. As well as those who were already in a very difficult situation when the pandemic hit, such as children and families without a financial security net. OTP Bank Hungary has donated HUF 300 million (approx. EUR 852,000) to hospitals to respond to the pandemic. In addition, a donation of HUF 1.5 million (or EUR 4200) with 185 computers for disadvantaged institutions and children from the less developed areas of Hungary.
 
Mobiasbanca - OTP Group also operated with the same culture of involvement. After researching the primary needs of the medical segment in Moldova, two video laryngoscopes have been purchased and donated to the Republican Clinical Hospital "Timofei Moşneaga", where patients in serious condition from all over the country are hospitalized. This equipment currently facilitates intubation of patients with severe respiratory impairment.
 
When the Serbian government launched a call for help in procuring medical equipment, Serbian subsidiaries of OTP Group joined the campaign. The bank also donated another 2.65 million dinars to the Central Hospital in Sremska, Mitrovica, the Nis Clinical Center, the Oncology and Radiology Institute of Serbia, the Central Hospitals in Subotica and Valjevo.
Another donation campaign in support of hospitals gained amplitude thanks to the cooperation of Bulgarian subsidiaries. Together with the DSK-Rodina Pension and Insurance Fund, DSK Bank encouraged its employees to make donations expected to handle the urgent needs of municipal and state hospitals.
 
In Montenegro, CKB and Podgoricka Banka, the local subsidiaries of OTP Group intervened promptly. The National Center for the Coordination of Infectious Diseases benefited from a 100,000 euros donation. The support from the bank was directed not only to medicine, sets were created containing basic food and hygiene products, later distributed to low-income clients.
OTP Bank Romania donated 500,000 RON to hospitals and local communities to combat the spread of the COVID-19 pandemic. The safety of doctors was the main goal, a sizable part of this amount assured with protective equipment the employees of the medical system. One of the beneficiaries of this donation was the Children's Hospital "St. Maria” from Iași.
Croatia was hit not only by COVID-19 but also by the March 2020 earthquake. Partially collapsed buildings, damage to the city's historic center, citizens forced to leave their homes - all required direct and consistent intervention. The Croatian subsidiary, OTP Banka donated 2.9 million kuni to Croatian hospitals. In addition, for the renovation works after the earthquake in March, OTP Banka donated 750,000 kuni to each of the 2 hospitals in Zagreb.
 
Fully aware of its responsibility for its customers, employees and partners both within Hungary and across the region, OTP Group monitors the evolution of the pandemic and identifies the most appropriate ways to support and mitigate the crisis, both locally and globally. - 
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OTP Group celebrates 70 years of activity this year, while the Moldovan subsidiary - Mobiasbanca - OTP Group S.A., marks 30 years of presence in the local market. OTP Group has become a dominant player in the Central and Eastern European market being an important banking group on a European scale. The community of approximately 40,000 employees serves nearly 20 million customers daily in 12 countries.