OTP Jumps Most in Week on Third-Quarter Profit: Budapest Mover

OTP Bank Nyrt., Hungary’s biggest lender, jumped the most in a week as non-performing loans showed the first quarterly drop in five years and adjusted net income beat analyst estimates.

The stock rose 3.4 percent to 4,479 forint by the end of trade in Budapest, snapping a 9.4 percent drop over the past five days. About 1.6 million shares changed hands, or 1.8 times the three-month average. The BUX index, in which OTP has a 33 percent weight, added 2 percent as Hungary’s economic growth accelerated more than economists’ forecast.

OTP posted adjusted net income of 42 billion forint ($190 million) for the three months through September, compared with a median estimate of 38 billion forint in a Bloomberg survey. The share of loans that were at least 90 days overdue fell 20 basis points, or 0.2 percentage point, to 20.6 percent, the first retreat since 2008, according to OTP.

“Results slightly beat estimates” and the improvement in “loan portfolio was refreshing,” David Sandor, a Budapest-based equities analyst at KBC Securities, said in an e-mailed report.

OTP’s net income slumped 74 percent to 10.9 billion forint after a surprise 37 billion forint write down related to the lender’s Ukrainian unit.

The write down in Ukraine, declining profitability in Russia are negative for the stock, Sandor said. Further measures taken by Hungary to help households with foreign-currency mortgages may also burden the company, he said.

Economic Growth

Hungary recorded third-quarter growth in gross domestic product of 1.7 percent compared with a year earlier, the fastest pace since the January-March 2011 period, according to preliminary data released by the statistics office today. The median forecast of 11 economists in a Bloomberg survey was 0.8 percent.

OTP’s net interest margin rose 19 basis points to 6.53 percent over the previous three months.

Signs for higher credit demand are surfacing both in Europe and Hungary as the country’s economy is “getting more dynamic,” Chief Financial Officer Laszlo Bencsik told reporters in Budapest.

OTP trades at 14.1 times earnings per share, below the 12.5 average for 16 eastern European banks.

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