OTP Bank Romania, the domestic unit of Hungary's biggest banking group, in the first half of this year registered net losses standing at 7.8m euros, around 22% bigger than in the corresponding period of last year. On the other hand, the bank's turnover advanced at a fast rate, with the volume of loans more than doubling from June 2006.
According to the data the parent company has recently published in Budapest, OTP Bank Romania's losses expanded to 1.66bn forints (5.9m euros) in the second quarter of this year alone. In the first six months, net losses amounted to 1.95bn forints (7.8m euros). In Hungarian forints, losses deepened by 17%, with the difference generated by the euro/forint exchange rate increase. "Losses were generated by the expansion of the operational branch network and by the considerable increase in the bank's number of employees. We had anticipated these losses in our budget for 2007," Laszlo Diosi, general manager with OTP Bank Romania (OBR), told ZF.
Hungary's OTP entered the domestic market in 2004 by purchasing a small bank, RoBank. The domestic unit embarked on an aggressive campaign on the retail segment as late as 2005 and since then has massively invested to expand its territorial network, which has entailed some losses.
OBR managed to boost its net interest income by almost 68%, in forints, to 2bn forints (8m euros). Overall revenues climbed by 59%, to 3.7nm forint (15m euros). At the same time, operating expenses surged by 51% to 5.5bn forint (22m euros).
"We'll break even next year," says Diosi, noting plans have not been modified. The bank opened two branches in Q2, thus reaching a network of 73 branches. By yearend, the bank will have 100 operating branches.
OBR has considerably bolstered its assets, which climbed by 85% between June 2006-June 2007, to almost 204bn forint (829m euros). The increase was fue
