OTP Bank Romania halves 9M profit on COVID-19 provisioning

OTP Bank Romania, the local subsidiary of Hungarian group OTP, reported a consolidated net profit of RON 39 million (EUR 8 mln) in the first nine months of the year, roughly half of the RON 79 mln posted in the same period last year.

The bank's profitability dropped due to the higher risk metrics in the context of the COVID-19 pandemic.

The provisions for potential non-performing loans rose by RON 36 mln in the first nine months compared to the same period last year to RON 69 mln.

The bank set up most of the loan loss provisions in the first quarter of the year.

"We have allocated resources to cover the potential risk, which will ultimately be reflected in profitability, to be able to perform in the market and finance the local economy," said Gyula Fatér, General Manager of OTP Bank Romania.

In the first nine months of the year, the operating profit was RON 136 mln, down from RON 142 mln in the same period last year.

The revenues from operations increased by 11% yoy, but the operational expenditure rose by 19% yoy amid rising IT spending, as a result of efforts to digitize services and increasing staff costs.

The latter came from the inflation adjustment of wages and an annual increase of 16% in the average number of employees.

(Photo courtesy of the company)