By Margit Feher
BUDAPEST--OTP Bank (OTP.BU), Hungary's largest lender by assets
and market share, expects the stock of its non-performing loans to
keep falling in the coming quarters as it forecasts that economic
conditions will improve marginally next year in the countries it is
operating in, an executive said Thursday.
OTP's stock of non-performing loans fell sharply in the third
quarter of this year from a peak in the second quarter, the company
said earlier Thursday in its third-quarter earnings report.
"It seems we can return now to our expectations that the stock
of NPL will fall. The engine behind the [non-performing loans] is
economic performance," Laszlo Bencsik, deputy chief executive, said
at a press conference.
OTP expects that economic conditions won't deteriorate further
in Hungary while improving slightly in the other regions in which
it operates.
However, Hungary's economy remained in recession, contracted
more than expected in the third quarter. It contracted 0.2% in the
third quarter from the second quarter in adjusted terms and shrank
1.5% in unadjusted terms from a year earlier, the central
statistics office said earlier Thursday.
With Hungary remaining mired in recession next year, OTP's
foreign units will continue to increase their contribution to the
bank's consolidated net profit, Bencsik said.
As a result of Hungary's poor economic performance, demand for
loans is still weak here, Bencsik added. OTP's consumer loans,
which generate a higher margin than some of its other loans, are
gaining momentum in the meantime in Ukraine, he added.
The share of non-performing loans of OTP's overall consolidated
loan stock, or the NPL ratio, is likely to peak in one of the
coming quarters, Bencsik added.
Write to Margit Feher at margit.feher@dowjones.com
