(Corrects bullet point and text in Oct 12 story to make clear
that it was NPL growth which peaked in Q2, and it is NPL volume
growth which will be below Q2 levels in Q3)
* NPL growth peaked in Q2 2010 - deputy CEO Wolf
* Sees zero loan book growth in 2010
* Eyes acquisitions in Romania, Serbia, Vietnam
By Krisztina Than and Michael Winfrey
VIENNA, Oct 12 (Reuters) - Hungary's OTP <OTPB.BU> expects
its risk costs to ease in the rest of 2010 but sees no lending
growth this year yet, while it eyes acquisitions in Romania and
Vietnam, its Deputy Chief Executive told Reuters on Tuesday.
Laszlo Wolf said that despite a windfall tax imposed by the
Hungarian government on the financial sector, OTP expects net
income generation to improve as risks costs gradually decrease
and the domestic market was expected to slowly improve.
Wolf said that new nonperforming loan growth -- those not
paid for more than 90 days -- had peaked in the second quarter
and risk provisions were expected to be below second-quarter
levels in the third and fourth quarters.
Speaking at the Reuters Central Europe Investment Summit,
taking place at Reuters offices in Vienna, London and New York,
he also said OTP's annual risk provisions this year were
expected to be below 2009 levels. In the second quarter OTP
booked provisions of over 96 billion forints.
He said the third-quarter growth in the non-performing loan
volumes was expected to be around 80 billion forints, plus or
minus 10 billion. This year the economy will post modest growth
and next year growth is already seen picking up, he added.
The government hopes for 2011 GDP growth of 2.5 to 3.0
percent. "I wouldn't call it as a turnaround (domestically) but
I would dare to say it is an improvement," he said.
But lending is not expected to resume growing yet, Wolf
added. "Generally we expected 5 percent (growth in the loan
book) this year, but I think it will be around zero and it will
be around zero also for the market. So the people are borrowing
less and saving more," he said.
He projected lending growth of around 5 percent for next
year for the Hungarian market overall.
He said OTP's unit in Montenegro -- where OTP had a big
goodwill charge in the second quarter -- would not impact group
third and fourth quarter results as the unit did not need any
more additional capital based on current knowledge.
Wolf also said that with its more than 16 percent capital
adequacy ratio and ample liquid assets, OTP was comfortably
positioned and ready to grab acquisition opportunities.
"We have enough liquidity, so we are waiting for a good
chance and if there's a good chance, we will move."
In central and eastern Europe, OTP is studying Romania and
Serbia for potential targets. Other targets were further afield.
"Vietnam -- this is our dream for many years. I think if there
is a good target we buy a stake, but not a majority stake."
He said Vietnam offered a fast growing economy and rising
consumption. OTP would spend less than 100 million euros if it
decides on an acquisition in Vietnam, he said.
(Writing by Krisztina Than; Editing by David Holmes)
