According to Sándor Csányi, the CEO of OTP Bank, the bank will not change its full-year 2007 profit guidance despite a slowdown in consumption and credit growth in the economy. Csányi said the first-quarter figures do not require the bank to change its earlier profit guidance.
Our view: In February OTP Bank had downgraded its earnings guidance for 2007 by 4.7% from HUF 222bn to HUF 211.6bn. The reduction was attributable to four factors i) a HUF 3bn lower forecast contribution from Russia, ii) HUF 3bn higher financing costs, iii) HUF 2bn attributable to the stronger forint, and iv) HUF 2bn attributable to lower Hungarian economic growth. At that time the consensus earnings estimates for 2007 were already below management guidance at HUF 211.5bn, and there has been no change since then. We expect the news to have a neutral trading impact.