Do u know how OTP understated NPL ratio in Ukraine in 4th quarter 2009? They just have restructured bad loans, e.g. if the borrower can not pay the debt, the bank signs a new agreement with the borrower to pay 100 HUF monthly. According to Ukrainian legislation restructured loans can not be classified as bad debts and are not the subject to special provisioning as bad debts.
Ask OTP the figures for restructured loans and there will be surprise.
Moreover, OTP in Ukraine didn’t provided new loans in 2009. The sole loans agreements were restructuring of bad debts and such hiding of bad loans. In 2009 OTP didn’t granted loans to new customers but the gross customer loans rested unchanged q on q in 4th 2009! This means that almost no borrower liquidated its debt to OTP in 4th quarter. You can imaging the size of NPL in such situation? Maybe 55%, maybe 95%, who knows … such manipulations helped reduce provisioning and to decrease negative result on after tax profit.
OTP in Ukraine
Ask OTP the figures for restructured loans and there will be surprise.
Moreover, OTP in Ukraine didn’t provided new loans in 2009. The sole loans agreements were restructuring of bad debts and such hiding of bad loans. In 2009 OTP didn’t granted loans to new customers but the gross customer loans rested unchanged q on q in 4th 2009! This means that almost no borrower liquidated its debt to OTP in 4th quarter. You can imaging the size of NPL in such situation? Maybe 55%, maybe 95%, who knows … such manipulations helped reduce provisioning and to decrease negative result on after tax profit.