OTP Bank, Hungary's biggest commercial lender, booked a consolidated after-tax profit of HUF318.5bn (€780mn) in Q3, up 8% and beating analysts’ consensus by some 10%. OTP's foreign units generated 64% of after-tax profit during the quarter, according to the earnings report released before the bell on November 8. 

Net interest income increased 15% to HUF444.2bn. Net revenue from commissions and fees rose 10% to HUF137.5bn.

Risk costs came to HUF27bn for the quarter, including HUF15bn in credit risk costs, mainly at OTP's banks in Russia and Bulgaria, as provisions were released in Hungary.

The divestment of the Romanian branch had a one-off positive impact of HUF10.5bn at the group level. OTP also booked a HUF16bn fair value adjustment on subsidised home loans and prenatal baby support credit in Hungary.

Total assets rose 5% year on year to HUF41.6 trillion.

OTP affirmed earlier management guidance: FX-adjusted performing loan volume growth could exceed 6% in 2023, while the lender's consolidated cost-to-income ratio could be around 45%.

OTP noted that it remains on the lookout for acquisition opportunities that could create value.

Deputy-CEO Laszlo Bencsik told journalists after the publication of the report that the lender's profitability was "outstanding" in Q1-Q3 with ROE of 24.9%. OTP's liquidity and capital position are stable, while its NPL ratio improved by 0.3pp to 4.0%, he added.

In Hungary, OTP's mortgage contract volume rose by a factor of close to 2.5 in Q1-Q3, while outlays of personal loans climbed over 60%, beating the market average, he said. Demand for corporate credit is "modest", while the stock of loans to microbusinesses and SMEs edged up 4%, he added.

OTP's Uzbek unit, Ipoteka Bank, acquired last year, generated profit of HUF42bn in Q1-Q3, he said.

Fielding questions, Bencsik said Hungary's transactions duty was "one of a kind" in the world and hurt Hungary's competitiveness as well as creating a market distortion for banks competing with fintech companies such as Revolut.

From next year, the transaction duty will raise a typical client's monthly charges by HUF300, he added.

OTP shares finished Friday’s session at an all-time high of HUF19,950. The share price went up 26% year-to-date and by 45% over the last 12 months.