The analyst call, following the release of 1Q06 results, was generally upbeat, with OTP Bank reiterating its full year earnings guidance for 16.7% growth to HUF 184.7bn. At this stage, management appears confident that it will be able to meet its full-year budget on both revenues and costs.
However, the highlight of the call was the comment, that there is a substantial risk that the special bank tax in Hungary (equating to 8% of pre-tax earnings or 6% of net interest income with a tax shield) might be continued beyond 2006. Although the special bank tax is still scheduled to be withdrawn, given the necessity for the new government to deliver a tighter fiscal policy, its continuation for another 2 years should not be ruled out.
There was no further detail provided on acquisition plans, except to say that a decision on at least one acquisition in the Ukraine (rumoured to be JSCB Raiffeisenbank Ukraine) is possible within a few weeks.
Overall, we expect a negative trading impact today, on the back of the comments on the bank tax.