OTP Bank Romania, the local branch of one of the most powerful Hungarian groups, OTP Bank, posted net losses worth 6.1 million euros (1.66 billion forints) in the first half of the year.
Its losses soared 105% compared with June last year. OTP accumulated losses of over 4 million euros (one billion forints) in the second quarter alone.
"The operating costs went up at a steady pace due to the expansion of the bank: the personnel expenses rose by 70%, as the number of employees increased. The bank posted a pre-tax loss of 996 million forints (13.1 million RON)," according to OTP Bank's release on the financial results sent to the Stock Exchange in Budapest.
The bank opened nine branches and hired 88 people in the second quarter. Therefore, OTP was operating 49 branches and had 641 employees at the end of June.
The officials of the group have repeatedly stated they expect the local branch to post losses in its first few years in business, which they are willing to bear in order to gain market share quickly. The Hungarians at OTP entered the Romania market in 2004, when they bought RoBank, one of the smaller banks in the system.
OTP Bank Romania's assets reached 407 million euros (110.2 billion forints) at the end of June, a year-on-year increase of 126% in forints. The bank's credit portfolio grew even faster, by almost 246% from June 2005 through June 2006, with the total loan volume reaching 226.6 million euros (61.24 billion forints). The majority shareholder says that approximately 64% of the growth of the lending portfolio in the first six months was fuelled by the retail sector, which rose nine times over the last six months. The share of this segment in the total portfolio therefore went up from 10% to 40%. Out of the total loans granted to individual clients, one third were secured with mortgages and the rest were loans granted with
