Hungary's OTP maintains forecast

Hungary's biggest bank OTP reported a 21 percent rise in second-quarter net profit on Friday, just short of market forecasts, but said it was broadly on track to meet it full-year targets. Net profit rose to 38.06 billion ($194 million) forints in the quarter from 31.37 billion a year earlier, and compared with an average forecast of 38.53 billion given in a recent Reuters poll of analysts.
"A quarter ago we said that our net profit would be between 154 billion and 160 billion forints ... and we now think it will be closer to 155 billion and will not reach 160 billion," Deputy Chief Executive Zoltan Speder told a news conference.
"A number of uncertainties, such as swap deals and the year-end value of our securities portfolio remain and that could influence earnings," Speder said.
OTP's first half net profit was up 16.9 percent at 76.40 billion forints.
At 0915 GMT the stock was down 1.5 percent at 7,290 forints after falling 3.3 percent on Thursday.
"The numbers are good, but not excellent like in previous quarters," a trader said.
"Expectations have gotten too high," he added.
A large institutional seller was behind the drop in the stock price and was followed by smaller, local sellers, the trader added.
The stock is up 30 percent since the start of 2005.
Net interest income rose by 24.6 percent to 76.90 billion forints in the second quarter and was well above expectations for 70 billion forints as lending, particularly mortgage and consumer lending picked up.
OTP has followed the central bank's interest rate cuts with a lag which allowed it to raise interest income by 13.3 percent while interest expenses fell 3.6 percent.
"Mortgage volumes were still below our expectations ... but there was a considerable pick-up after a very sluggish first quarter," Speder said.
The bank's net interest margin shrunk compared with a year ago, mostly on the central bank's series of rate cuts, but rose against the previous quarter as OTP delayed cutting its own lending rates.
Speder said rates have already come down by as much as the bank expected at the start of the year but he now saw more monetary easing and forecast a base rate of 6 percent, compared with the current 6.76 percent.
Non-interest income rose by 15.6 percent, primarily on a 31 percent jump in fee and commission income, mostly related to the mortgage and consumer lending pick up.