OTP Bank Romania announces profit of 22 million RON for 2020
OTP Group announces the financial results for 2020, a year severely marked by the Covid-19 pandemic effects. OTP Bank Romania has registered an after tax profit of 22 million RON during 2020, lower than the result of the previous year, due to higher expected risk costs generated by the Covid-19 pandemic. During last year, loan risk related provisions increased by 80 percent, amid uncertainties caused by the pandemic.. Most of the provisions to cover these risks have been in place since the first half of the year.
“The pandemic has struck 2020 as an unexpected tempest and tangled everyone’s plans. We evaluated the risks and set in place the premises for OTP Bank to properly function and perform, constituting additional provisions in the amount of 70 million lei to cover the potential risks caused by the pandemic. We stayed true to our organic growth strategy, Apollo, with a market share target of 5 percent by 2024. This has brought a significant increase in our operation and a 13 percent growth of the loan portfolio, while our total loan market share has reached 3,74 percent. This way we have managed to finance the local economy, provide moratorium deferrals in time, provide funds for small and large companies, all while opening new branches, introducing new digital banking services, and hiring 200 new colleagues”, said Gyula Fatér, CEO OTP Bank Romania.
Operating profit in 2020 reached 163 million RON, following the increase of 10 percent in total income, compared to 2019. At the same time, operating expenses grew by 20 percent y-o-y, as the bank followed its growth strategy Apollo, launched in 2019. As it follows, IT and digital developments launched by OTP Bank in 2020 had an important stake in higher IT expenses, while personnel expenses rose by 21 percent compared to the previous year, as the total number of employees grew by 13 percent.
The net interest income improved by 10 percent y-o-y to a total of RON 451 million being supported by a dynamic expansion in performing loan volumes, while the interest margin decreased by 15 bps (basis points) last year.
Supported by an increased lending activity, the performing loan volumes increased by 13 percent y-o-y. OTP Bank Romania has been an extremely active financial player in the Government guaranteed financing programs, and as a consequence the segment of loans for micro and SME’s grew by 15 percent, while the corporate segment contributed with a 9 percent increase from year to year.
Regarding loan quality, overall, the volume of loans classified in stage 1 and 2 increased by 13 percent, and the volume of loans from stage 3 remained on a downward trend in 2020 (-2 percent).