Equity 24 February 2012, 11:11am

Hungary OTP CFO discloses ambitious plans for 2012

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Hungary's OTP Bank is targeting double-digit percentage growth in corporate lending in its core Hungarian market in 2012 and a steady market share in household lending, Chief Financial Officer László Bencsik told Reuters in an interview.

"We have quite ambitious targets in Hungary," OTP CFO Bencsik told Reuters in an interview on Thursday.

"We have double-digit growth targets in terms of our lending volumes to Hungarian corporate clients."

OTP, emerging Europe's largest independent lender, has not been able to grow its loan book substantially in the past several years as the region slid into an economic slowdown that could return this year after a brief period of growth.

OTP said last year it expected a charge of nearly HUF 40 billion from a government scheme that allow fixed-rate repayments of foreign currency household mortgage loans at a deep discount to prevailing market rates.

Bencsik did not say what the total charge was as the bank reports its earnings on 9 March, but added the bank was working on a package to solve foreign currency loan problems for local governments, where its market share is dominant.

"We are considering a solution that would also help this sphere of clients," he said without elaborating.

OTP Core had HUF 330 bn worth of municipal loans at the end of September 2011, 60% of which was forint-based and 40% FX debt.

Bencsik also said OTP did not view the economic outlook in Hungary as dourly as the European Commission and said the bank was working on the basis of zero growth for 2012, marginally better than a minus 0.1% forecast given by the EU's executive.

Liquidity will not be an issue, especially in local currency, which is abundant at the bank, he added, so OTP is unlikely to take advantage of new liquidity tools offered by the National Bank of Hungary, designed to boost lending."We believe that chances are reasonable that Hungary can avoid recession this year," Bencsik said. "We expect a close to zero growth environment."

He added that, like the market, OTP expected the government to strike a deal with the European Union and the International Monetary Fund this year, which will increase market confidence in the country and ease market financing.