Hungary MKB Bank's H1 profit drops 55%

Net interest income climbed 6% to HUF 21.5 bn, but net revenue from commissions and fees dropped 17% to HUF 11.7 bn. MKB booked a HUF 6.7 bn loss on the "other income" line, compared to a HUF 12.3 bn gain in the base period. Earnings per share came to HUF 237.2 for the period. MKB had total assets of HUF 1,827.7 bn at the end of June, down 10% from twelve months earlier. Net stock of client loans fell 3% to HUF 924.8 bn and stock of deposits rose 7% to HUF 1,330.2 bn. In a conference call after the report was published, MKB CFO Csaba Gábor Fenyvesi attributed the big drop in H1 after-tax profit to a high base and restrictions on MKBʼs balance sheet because of European Union commitments related to the lenderʼs earlier bailout. He said H1 2018 was an "outlier" because of foreign exchange and yield volatility that had created a "significant distortion", causing after-tax profit to jump while other comprehensive income fell. In an investor presentation, MKB noted that adjusted total comprehensive income for H1 rose by HUF 11.1 bn from the base period. Fenyvesi said MKBʼs balance sheet restrictions had put the lender at a disadvantage compared to its competitors. He added that, at the same time, MKB had managed to reduce costs relative to total assets, boost its capital adequacy ratio and improve its portfolio quality. MKBʼs cost-to-total assets ratio stood at 1.95% in H1, while its capital adequacy ratio reached 19.3% and the rate of loans past 90 days due fell to 3.0%. Fenyvesi noted that MKBʼs private banking assets had reached HUF 605.7 bn in H1, giving it 11.7% market share.