OTP Bank Romania posts net profit of 2 million RON, down 88 percent in the first quarter

OTP Bank Romania recorded a consolidated net profit of 2 million RON, down 88 percent in the first quarter of 2024. The result was influenced by a lower level of income, the increase in operating expenses and the new banking tax introduced in 2024, which obligates the bank to pay an additional 2 percent of its turnover. Consequently, the amount of tax paid exceeded 13 million RON, from 5 million RON in the previous quarter.

Operating profit in the first quarter of 2024 reached 45 million RON, a level 34 percent below the fourth quarter of last year, as a result of the 5 percent reduction in total income, and the increase by 7 percent in operating expenses, largely due to the annual deposit insurance fee recognised in January.

“The first three months of 2024 emphasized, once again, the ability of OTP Bank Romania to sail firmly over the wave of current economic challenges demonstrating the resilience and commitment to deliver solid operations, fostering growth and maintaining its unwavering dedication to serve its customers. Strengthening customers base alongside with robust growth in retail deposits as well as a solid capital position reflects the bank remains steadfast in its commitment to sustainable growth and maintaining a solid financial position. The difficult fiscal and operational environment we have encountered has a direct impact on results, but the team has responded with adaptability and the same commitment for quality banking services, ensuring the stability and continuity of operations and customer service. I am proud of this constructive approach of the entire team for the continuity and optimization of the business, especially during the sale process”, said Gyula Fatér, CEO OTP Bank Romania.

The net interest income decreased by 4 percent q-o-q, to a value of RON 177 million, as a result of the reduction in the volume of newly granted loans, in a general banking context characterized by high interest rates, and the decrease of the current loan stock. Net fees and commissions increased by 41 percent in local currency, a change caused by the base effect of the reversal in the leasing entity of the penalties for early terminated agreements in the fourth quarter of last year while other income decreased by 30 percent caused by the normalization of income from currency exchange, which had increased owing to seasonal effects in the fourth quarter.

Total risk cost decreased by 19 percent compared to the previous quarter, reaching RON -29 million, mainly on account of the 16 percent decrease in provisions for losses from lending activity, while the costs of other risks were close to zero at the end of the period.

Performing loan volumes decreased by 3 percent q-o-q at the end of the first three months of the year, following a 2 percent reduction in retail lending, a 3 percent decline in corporate lending and a contraction of 6 percent in leasing activity. The demand for personal loans and real estate loans remained stable, while the pace of lending slowed down in the corporate segment in line with market evolution.

FX-adjusted deposit volumes decreased by 2 percent in 2024 compared to the last quarter of 2023, but at the annual level the growth recorded was 14 percent, thanks to a 17 percent increase in retail deposits and a 10 percent increase in corporate deposits.  Corporate deposits fell by 10 percent q-o-q because three large corporate customers’ term deposits matured.

According to local reporting standards, the bank´s assets reached the level of RON 19.7 billion, a stable level, comparing to 2023.

The bank’s capital adequacy ratio reached the level of 23.36  percent (+140 bps y-o-y)on the background of own funds increase.