Strong beat on operating profit, provisions

OTP posted HUF 382 bln net profit vs. our estimate of HUF 312 bln and market cons.
of HUF 277 bln. The substantial beat vs. expectations came from better NII (6%
ahead our estimate), higher other income (HUF 89 bln vs. our forecast of HUF 55 bln)
while risk cost was a positive item driven by better macroparameters and overall provision releases (RO, DSK, HR and RU, Ukr).
Key positives
 OTP had a substantially better result than expected thanks to the revenue side as well
as better provisions and costs too. NIM improved by 11 bps as a result of euro related countries. Other income included a HUF 34 bln of revaluation item related to subsidized loans and RU was very strong due to FX conversion. P&L figures are distorted
by the stronger HUF which had a negative impact on revenue lines.
Key negatives
 Hungarian NII came out better q-o-q by 8% but this contains a positive technical oneoff, without it NIM would have been lower and NII would have declined too. NIM in
Ukraine fell by 66bps q-o-q and in Russia too.