For more from the Reuters Central European Investment
Summit, click on:
http://www.reuters.com/summit/CentralEuropeanInvestment09?pid=500
By Balazs Koranyi
VIENNA, Sept 29 (Reuters) - Hungary's OTP Bank remains on
track to meets its 2009 profit target and as the global recovery
picks up pace, its risk costs could begin falling as early as
the second quarter, Chief Financial Officer Laszlo Bencsik said
on Tuesday.
OTP's <OTPB.BU>, Central Europe's biggest independent bank
with capitalisation of $8.1 billion, expects risk provisions in
the second half to remain in line with first half figures. If
market condition do not change significantly, a decline could
start early next year, Bencsik told the Reuters Central European
Investment Summit.
"We would be surprised if it happened in the first quarter,
but if we look at the momentum we have now, it could already
come through in the second quarter but it could be delayed until
the third or fourth," Bencsik told the summit, held in the
Reuters office in Vienna.
"Our profit target is on track," he added.
OTP earlier said it expected to earn a net profit in excess
of 150 billion forints ($815.7 million) which will enhance its
4.3 billion euro liquidity buffer and position it for either
organic or acquisitive growth.
"This region will be more and not less interesting as it
used to be," Bencsik said.
"After the crisis, this will be a higher growth and probably
a higher margin banking market than western Europe, or I would
even say that in global terms, it will be one of the highest
growth and one of the highest margin markets."
The financial crisis hit the region's mostly foreign-owned
banking sector hard as a shortage of funding, deteriorating
portfolio quality, and in some cases, currency problems prompted
investors to flee.
But confidence recovered as parent firms recapitalised
subsidiaries and the IMF, along with the EU, provided aid to
some of the region's countries.
OTP had a 15.9 percent capital adequacy ratio at the end of
the first half and was one of the best capitalised banks in
Europe.
SOME LENDING GROWTH
Echoing remarks at the Reuters Summit by emerging Europe's
top two lenders, UniCredit <CRDI.MI> and Raiffeisen
International <RIBH.VI>, Bencsik said that in some areas, loan
growth was picking up again. [] []
"In Russia, a bit unexpectedly, (consumer lending) started
to grow two months ago. We started to lend to Hungarian
corporates as well -- there is demand," he said.
Although OTP's liquidity buffer will provide the basis for
growth, he did not expect any big players to leave behind
acquisition opportunities.
"I don't expect larger players to withdraw from the market
so I don't see big opportunities for consolidation," Bencsik
said. "On the other hand, I see some consolidation through
reshuffling of assets."
He said acquisitions down the road are possible but OTP was
not looking at any specific targets.
Its liquidity buffer also means OTP will not have to tap
international credit markets for funding.
"Until wholesale markets come down to reasonable levels in
terms of pricing I don't see any rational return to the market,"
he said.
He declined to predict when overall lending volumes could
begin to grow but said growth has already started in some
markets.
"We already see revival in Russia of consumer lending, we
see a pickup in demand, the new volumes are quite near last
year," Bencsik said. "We started to lend to Hungarian corporates
and ... I expect Hungarian corporate (lending) to go up this
year."
(Reporting by Balazs Koranyi; editing by Patrick Graham)
