Hungary – Financial Supervisory Authority issues recommendations for internal control systems in financial institutions; OTP Bank reports consolidated net profit for 2012 of € 515 mln (down 7.1% from 2011), ROE of 10.2% (down from 11.8%), ROA of 1.5% (down from 1.6%)

On 11 March the Hungarian Financial Supervisory Authority (Pénzügyi Szervezetek Állami Felügyelete – PSZÁF) issued Recommendation No. 6/2013 on internal safeguards and management in financial institutions.  This recommendation (ajánlás), which supersedes Recommendation No. 11/2006, takes into account the Guidelines on Internal Governance (GL44) issued by the European Banking Authority (EBA) on 27 September 2011 as well as the Guidelines on certain aspects of the MiFID compliance function requirements (ESMA 2012/388) issued by the European Securities and Markets Authority (ESMA) on 6 July 2012.

Sources:

A Pénzügyi Szervezetek Állami Felügyelete elnökének 6/2013. (III. 11.) számú ajánlása a belső védelmi vonalak kialakításáról és működtetéséről, a pénzügyi szervezetek irányítási és kontroll funkcióiról (2013-03-11)

EBA GL44: Guidelines on Internal Governance (2011-09-27)

ESMA 2012/388: Guidelines on certain aspects of the MiFID compliance function requirements (2012-07-06)

In other news, on 8 March the largest commercial bank in Hungary, OTP Bank Plc. (Országos Takarékpénztár és Kereskedelmi Bank Nyrt.), published financial statements for 4Q 2012 and for the entire year.

In 2012 the multinational OTP Bank group earned a consolidated, adjusted, after-tax profit of 149,949 mln HUF (€ 515.3 mln), down from 161,405 mln HUF in 2011 and 162,110 mln HUF in 2010.  (On 31 December 2012 one euro equaled 291.0069 Hungarian forints.)

At end-2012 the group’s total assets were 10,113,466 mln HUF (€ 34,753 mln), compared to 10,200,527 mln HUF at end-2011 and 9,780,946 at end-2010.  In 2012 for the group as a whole ROE was 10.2% (down from 11.8% in 2011), ROA was 1.5% (down from 1.6% in 2011), and net interest margin was 6.40% (up from 6.31% in 2011).

(In 4Q 2011 the group took goodwill impairment charges of 23,979 mln HUF for OTP banka Srbija (Serbia), OTP Bank JSC (Ukraine), OTP banka Hrvatska (Croatia), and Crnogorska komercijalna banka (Montenegro).)

Below is a summary of the OTP Bank group’s results for the last three years, by country:

	Net profit (mln HUF)			ROE (%)			ROA (%)			Net interest margin (NIM) (%)			Headcount (at yearend)
	2012	2011	2010	2012	2011	2010	2012	2011	2010	2012	2011	2010	2012	2011	2010
Hungary: OTP Core	94,587	114,056	146,921	7.1	9.5	13.8	1.5	1.7	2.3	4.58	5.01	4.98	8,507	8,470	8,034
Russian Fed.: OAO OTP Bank	47,158	41,042	20,545	28.0	33.8	24.3	5.0	5.4	3.3	17.93	16.18	14.30	5,177	5,108	4,768
Bulgaria: DSK Group	24,214	12,744	18,190	11.6	6.0	8.8	1.8	1.0	1.5	5.63	5.80	5.77	4,736	4,477	4,321
Ukraine: OTP Bank JSC	528	5,091	8,928	0.5	4.4	8.9	0.1	0.7	1.3	6.93	5.59	7.10	3,052	3,003	3,075
Romania: OTP Bank Romania	-5,530	763	-6,406	-18.2	2.9	-25.3	-1.2	0.2	-1.6	3.45	4.22	4.66	970	957	1,104
Croatia: OTP banka Hrvatska	3,714	3,552	2,721	6.3	0.2	4.6	0.7	0.0	0.6	3.09	3.03	2.93	984	971	1,016
Slovakia: OTP Banka Slovensko	-1,082	-409	-952	-3.8	-1.5	-3.9	-0.3	-0.1	-0.3	3.16	2.98	3.09	639	609	573
Serbia: OTP banka Srbija	-4,934	-6,283	-7,312	-18.7	-27.5	-32.0	-4.0	-5.3	-6.0	2.51	1.24	2.12	660	649	708
Montenegro: Crnogorska komercijalna banka	-3,872	-4,525	-16,844	-23.3	-27.9	-85.8	-1.8	-2.0	-7.5	3.28	2.51	3.19	422	450	451

Notes to table:

Hungary: OTP Core consists of OTP Bank Plc, OTP Mortgage Bank Ltd, OTP Building Society Ltd, OTP Factoring Ltd, OTP Financing Netherlands Ltd, and OTP Holding Ltd.

Russia: Headcount is without employed agents.  Number of employed agents: 8,339 (2012), 6,940 (2011), 5,444 (2010).

Ukraine: Data are for JSC OTP Bank + LLC OTP Leasing + LLC OTP Factoring Ukraine + (from 4Q 2010) LLC OTP Credit.

Ukraine: Headcount is without employed agents.  Number of employed agents: 2,107 (2012), 1,410 (2011), 0 (2010).

Bulgaria: Data are for DSK Bank LLC + DSK Leasing JSC + (from 3Q 2010) OTP Factoring Bulgaria LLC.

Slovakia: Data are for OTP Banka Slovensko JSC + (from 1Q 2011) OTP Faktor Slovensko LLC.

Serbia: Data are for OTP Bank Srbija JSC + (from 4Q 2010) OTP Factoring Serbia LLC.

At 31 December 2012 the group’s core bank, OTP Bank Plc. in Hungary, had total assets of 6,639,821 mln HUF (€ 22,817 mln), giving it a market share of 28.2% in assets among Hungary’s 29 domestic commercial banks.

The bank’s auditor is Deloitte Auditing and Consulting Ltd. (Deloitte Könyvvizsgá ló és Tanácsadó Kft.).

Sources:

Summary of full-year results submitted to Budapest Stock Exchange: 2012: OTP Bank Nyrt.: Tájékoztató a 2012. évi eredményről (2013-03-08)

Summary of full-year results submitted to Budapest Stock Exchange: 2011: OTP Bank Nyrt. Tájékoztató a 2011. évi eredményről (2012-03-09)

IFRS financial statements: 2012 (separate, condensed, unaudited: OTP BANK NYRT. AZ EURÓPAI UNIÓ ÁLTAL ELFOGADOTT NEMZETKÖZI PÉNZÜGYI BESZÁMOLÁSI STANDARDOK SZERINT KÉSZÍTETT EGYEDI SZŰKÍTETT BESZÁMOLÓ A 2012. DECEMBER 31-ÉVEL ZÁRULT ÉVRŐL

IFRS financial statements: 2011 (consolidated, audited): OTP BANK NYRT. AZ EURÓPAI UNIÓ ÁLTAL ELFOGADOTT NEMZETKÖZI PÉNZÜGYI BESZÁMOLÁSI STANDARDOK SZERINT KÉSZÍTETT KONSZOLIDÁLT PÉNZÜGYI KIMUTATÁSOK A 2011. DECEMBER 31-ÉVEL ZÁRULT ÉVRŐL

Assets of banking sector at end of 2012: A hitelintézeti szektor 2012. előzetes év végi összesített adatai (2013-03-05)

Mark Pleas

Eastern Europe Banking & Deposits Consultant

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