Repository: flairNLP/flair

Issue:
UnboundLocalError: local variable 'token' referenced before assignment
**Describe the bug**
When I am trying to run the NER for some text, I am getting this error

Below is the complete error:
    sentences = [Sentence(sent, use_tokenizer=True) for sent in split_single(AText)]

  File "C:\ProgramData\Anaconda3\lib\site-packages\flair\data.py", line 490, in __init__
    [self.add_token(token) for token in tokenizer(text)]

  File "C:\ProgramData\Anaconda3\lib\site-packages\flair\data.py", line 1367, in segtok_tokenizer
    previous_token = token

UnboundLocalError: local variable 'token' referenced before assignment


**To Reproduce**
```python
AText = '''
JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
1
 
 
 
 
 
 
 
 
 
JPMORGAN
 
 
Moderator
:
 
Paul Formanko
 
May 13
, 2016
 
14
:
00 GMT
 
 
 
Operator
:
 
This is conference # 958739.
 
 
Operator
:
 
Welcome to the OTP Bank First Quarter 2016 Conference Call.  At this time, 
all participants are in a listen
-
only
-
mode.  There will be a 
presentation 
followed by a question
-
and
-
answer session.
  
At which time, if you wish to ask 
a question, you will need to press star and one on your telephone.  
 
 
 
I must advise you that this conference is being recorded today, Friday, May 
13, 2016.
 
 
 
I woul
d now like to hand the conference over to your speaker today, Mr. Paul 
Formanko.  Please go ahead, sir.
 
 
Paul Formanko
:
 
Thank you, operator, and good afternoon all.  Thank you very much for 
joining us today.  This is Paul Formanko from JPMorgan and dialing
 
in from 
Budapest
 
w
e have with us today Mr. Laszlo Bencsik, OTP Bank's Chief 
Financial and Strategic Officer.  Laszlo, please, over to you.
 
 
Laszlo Bencsik
:
 
Thank you, Paul.  Thank you for the introduction.  Good morning and good 
afternoon, depending where
 
you are, and welcome on OTP Group's 2016 first 
quarter conference call.  As usual, we have a presentation available on the 
website.  So, hopefully, you've been able to access it and download it, and you 
can follow me when I go through at least the most im
portant pages.
 
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
2
 
 
 
 
So, starting on page 2, you can see the quarterly results.  The accounting profit 
was HUF34.3 billion and the adjusted profit, HUF47.6 million.  We booked 
one item as adjustment, that's the bank tax for this year.  The total annual bank 
tax was booked acco
rding to IFRS in the first quarter.  We expect one more 
adjustment coming, likely to be in the second half of this year, and that is the 
one
-
off revenues from the Visa shares sales.  We already communicated that 
the originally expected 
amount
 
was EUR34.2 m
illion, coming in as an inflow 
in the second quarter.  Now, this 
has 
changed slightly.  First of all, the 
expected time of this income has shifted forward somewhere to the second 
half of this year, and also the cash amount we are expected to receive should
 
be higher.  We don't know exactly how much higher, but the deferred part will 
be less which we did not quantify previously, and the upfront cash amount is 
going to be higher.  We don't know exactly how much higher.
 
 
 
Next page, the P&L for the Group and b
reaking down different lines.  First of 
all, you can see 
the corporate tax
 
was relatively high compared to the pre
-
tax 
profit.  So, we have a higher effective tax rate, mostly coming from Ukraine, 
but also Hungary and Romania was higher.  You already saw l
ast year that on 
a quarterly basis, the effective tax rate fluctuated somewhat, and this is going 
to be also this year.  There is no reason
, however
 
to expect, on an annual 
basis, different effective rate than roughly 20 percent.  So, these are more or 
les
s one
-
offs or kind of expected to reversing items related to deferred tax 
assets.
 
 
 
There were no one
-
off items only one 
with 
HUF0.2 billion.  And in the lower 
section of this slide, you see the major P&L lines.  I'm going to talk in detail 
about the vario
us income lines and also about the costs.  Some of those 
change because of seasonality, some of those change because of underlying 
business developments, which I'm going to explain later on.  The very kind of 
striking out number is the risk costs.  As you 
can see, the quarterly risk cost 
was HUF20.8 billion.  I think we have not seen these levels of quarterly risk 
costs since 2008.  So, this is a level which is, I believe, somewhat 
representative of the current environment and the future environment which 
w
e expect in the next couple of years, namely a reasonably relatively low risk 
environment, at least compared to the previous years.  The risk cost rate in the 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
3
 
 
 
first quarter was 1.3 percent on the Group level, which is indeed quite a 
normalized and moderate
 
level.
 
 
 
Now going forward, o
n page 4, you see this split of
 
the CEE countries and the 
Russia and Ukraine.  
D
uring the previous two years, there was a hu
ge gap 
between these two groups:
  
CEE did very well, improved profits and was 
increasing, whereas Russ
ia and Ukraine generated large losses, especially 
Ukraine, and these numbers on the slide do not include 
the 
one
-
offs 
which we 
booked in the eastern part of the 
country
 
and Crimea 
for expected 
losses.  So, 
even if we add those, that was even bigger
,
 
the loss in 2014 and 2015.  And 
the good news is that the first quarter of this year was positive in Ukraine and 
Russia.  This is in line with what we previously expected and communicated 
to you and this is why we are going to expect for the remaining par
t of this 
year, both of these countries providing positive results.
 
 
 
On page 5, you can see further details on the individual performance of the 
group members, Hungary being up quarter
-
on
-
quarter by 4 percent and down 
year
-
on
-
year by 2 percent.  Bulgaria 
up quarter
-
on
-
quarter almost 30 percent 
and down 22 percent, but the first quarter last year was really exceptional 
because the risk cost was actually positive.  So, there was a write
-
back
. Thus
, 
this huge difference year
-
on
-
year is more explained by 
that
.
  
And then we 
have this middle section, the smaller banks in the portfolio which contributed 
positively to the Group, each of them.
 
 
 
And then in the bottom, you see Russia and Ukraine altogether being positive 
and Russia in itself being positive, despite 
the fact that Touch Bank, which is 
this virtual unit which we report as such the online bank which remains 
negative, and actually the expectation related to Touch Bank itself is that it's 
going to continue to be negative for the remaining part of this year
 
because we 
are still in this mode of building up this business and spending a lot on 
customer acquisition and having relatively large cost base, at least as long as 
we don't have the sufficient level of business volumes and revenues.
 
 
 
On page 6, we see a
 
few miscellaneous items.  The first one is the bank tax.  
You already saw in the first quarter results as compared to last year, there was 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
4
 
 
 
a considerable reduction in the bank tax.  Now, this we expect to continue 
from this year to next year, and on this 
page, we try to highlight the main 
expectations.  So, basically the ratio of the bank tax is going to go down from 
24 basis points to 21 basis points, and also the base of the calculation moves 
ahead.  Therefore, the expected bank tax next year is going to
 
be lower by 
HUF1.5 billion after tax.  So, instead of the HUF13.3 billion which we 
booked in the first quarter this year, we expect HUF11.8 billion after
-
tax to be 
booked next year, that's a HUF1.5 billion decline.
 
 
 
There's also one more element which is
 
revealed in the budget for next year, 
n
amely the elimination or cessation of the previous contribution tax.  This is a 
tax which,
 
if I remember right, started
 
somew
here in 2006 and was related to 
the subsidized
 
HUF mortgages and this was introduced by the
 
social
ist
 
government at this time and we have been paying this extra tax.  But we have 
report
ed this tax as part of exp
e
nses
 
as general OPEX
.  We have not shown it 
as a one
-
off item and has been with us for 10 years now and it's going to phase 
out next ye
ar.  So, this year, we paid HUF1.7 billion after
-
tax, HUF2.1 billion 
pre
-
tax, and this is an amount which will not appear next year.  So the impact 
will be HUF1.7 billion after
-
tax positive impact on the bottom line and it's not 
going to come out of the on
e
-
offs or the adjustments.  It's going to come out 
from the operational expenses.
 
 
 
Now, the rest 
is 
just updates on the ongoing 
Swiss Fr
ank mortgage conversion 
program in Croatia and in Romania.  We are progressing with these and 
expect to 
complete
 
them s
oon.  There's this extra legislation in Romania 
related to the walkaway rights of mortgage customers.  We have not seen so 
far any changes in customer 
behavior 
related to this and therefore, we don't 
see any immediate impact or expected impact on future re
venues or profits.  
And finally, the Visa transaction which I've already talked about.
 
 
 
On page 7, you see the total income development on a quarterly basis.  
Overall, we declined by HUF5 billion, 3 percent, and here you see the 
composition of this.  Ther
e was 
a bigger step
 
in Hungary and Bulgaria, and 
I'm going to explain it in detail, basically regarding the NII and the fee income 
and the other income which components resulted in this.  
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
5
 
 
 
 
Now, this is minus HUF3 billion in Russia, and this is only coming
 
from the 
FX rate.  In ruble terms, revenues increased by 2 percent.  So, the only reason 
we have 10 percent lower revenues in our reporting currency, which is the 
Hungarian forint, is that the Ruble was very weak, especially the beginning of 
the year.  By
 
now, it's corrected back.  So, we have seen ruble rate 
strengthening and actually they are back to end of last year levels.  So, this is 
going to be a kind of oppos
ite direction
 
in the second quarter, if things 
continue as they are.  So, in HUF terms, in 
forint terms, we're going to see 
similar increase due to the exchange rate dynamics in Russia.
 
 
 
In Ukraine, there was an intrinsic improvement, both in Hungarian
 
forint and 
in local currency 
-
 
later you will see the details 
-
 
and also Romania, but this is
 
due to a base effect.  You might remember that last year in the fourth quarter, 
there were HUF1.7 billion equivalent of negative one
-
offs
, which reduced 
the 
revenues of our Romanian bank, and these one
-
offs are out and therefore, we 
have a sizable increas
e of the total revenues in Romania.  But again, this is 
related to this base impact.
 
 
 
Going to page 8, where you see details of the net interest income decline on a 
quarterly basis, which was HU
F4 billion altogether in HUF of which
 
HUF3 
billion came from Hungary.  Now, out of this HUF3 billion, basically around 
40 percent, close to 50 percent, H
UF1.3
-
1.
4 billion is related to the 
revaluation of derivative instruments related to the changes in the yield curve 
and basically the re
-
pri
cing of the IRS swaps.  So, this was a kind of one
-
off 
and there's some correction we have already seen in April and May.  
Consequently
, this is not going to recur in the further quarters.
 
 
 
Russia, again as you can see, in ruble terms actually, we had 6 p
ercent growth 
in net interest income as opposed to the minus 7 percent decline in HUF.  So, 
this is just related to the FX rate.  And in Ukraine, there was a reasonably 
strong growth, which is partially due to the fact that the intra
-
Group 
subordinated deb
t
 
was converted into equity.  T
herefore, the cost of funding of 
the Ukrainian entity went lower, whereas at the same time, the corporate 
center revenues declined in the Group.  So, it's just an intra
-
Group allocation 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
6
 
 
 
effect, but also there was another thir
d
-
party sub debt which was repaid.  So, 
that's another element which reduced the cost of funding of the Ukrainian 
entity.
 
 
 
Now page 9, last time we had the 
conference call
, we had a lengthy discussion 
about the expected net interest marg
in of the Group an
d especially at OTP 
Bank,
 
Hungary.  
Both
 
on the Group level and in OTP Hungary, we had 
experienced a decline in the first quarter.  Hungary was 343 basis points and 
on the group level, the first quarter was 484 basis points, which compared to 
the annual 
20
15 
NIM for the Group, which was 511 basis points, you already 
had 27 basis points decline.  And 
I said that we expect
 
on an annual basis 
around 20 basis points
 
NIM decline
.  It's clear that due to the current rate 
environment expectations in Hungary, this 
decline seems to be higher than 20 
basis points on an annual basis.
 
 
 
So, on the Group level, our current best estimate of the annual decline of the 
net interest income is around 25 basis points.  And this might surprise you that 
we don't expect kind of la
rger further decline of the NIM on the Group level, 
and the reason is that we expect still a step down in the second quarter.  But 
in
 
the second half of this year, we expect improve
ment
 
primarily driven by 
volume dynamics, especially in Hungary, and also d
riven by stronger ruble 
rate in Russia, which will have some impact already in the second quarter.
 
 
 
In other markets, Bulgaria, we had a margin decline which will not be so 
severe in the following quarters, but will probably continue.  Russia was 
stable 
in HUF terms, but again, if you look at the net interest margin in ruble 
terms, actually the NIM improved by 180 basis points, and due to the stronger 
ruble in the second quarter, this is going to translate back to the Group NIM as 
well and hopefully, when
 
volume dynamics turn around in the second half as 
usually do in Russia due to seasonality, this might even improve in terms of 
the share of its contribution t
o the overall Group NIM.  So
 
much about the 
margins and the expectations related to the NIM for t
he whole year as a 
guidance.
 
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
7
 
 
 
 
Now, talking a bit about the volumes, first of all, the loan to deposit ratio, 
that's another very positive event.  In the first quarter this year, the previous 
long decline of the loan to deposit ratio turned around and the 
decline stopped 
and we actually have 1 percentage point growth in the Group level net loan to 
deposit ratio.  And most importantly, Hungary started to grow as well, which 
we are quite happy about.
 
 
 
Now on page 11, you see the reasons for this turnaround o
f the previous trend 
of the net loan to deposits ratio, namely the volume developments in Hungary.  
As you can see, during the first quarter, Hungarian performing volumes 
increased by 2 percent.  There was 
a 
4 percent increase in consumer loans and 
there w
as 
a 
7 percent increase in corporates, including small, large and 
medium
 
size ones
.  And if you only
 
look at the loans to Hungarian companies
, 
then it was 6 percent.  So, the only part which remains to decline is the 
mortgage group, but I will later on try
 
to explain the very positive 
developments of new mortgage demand and new mortgage sales.  And in 
general, we are quite positive about expectations related to consumer loan 
volumes in Hungary and to corporate loan volumes, and the new mortgage 
production a
lso looks very good.
 
 
 
In Russia, we saw consumer volumes going down in the first quarter.  This is 
due to two factors.  One is the usual seasonality.  Usually, the POS volumes 
are seasonally weak in the first quarter in terms of new sales and therefore, w
e 
should see a decline in volumes, but also we have not restarted with large 
volumes credit card sales.  So, this year, we are still conservative a
nd the 
cross
-
sales machine has not started 
at 
full speed
 
yet
.  We are doing it kind of 
low level, being very 
cautious and still waiting, but this is a potential business, 
so we can restart soon.
 
 
 
And then, in Romania and Croatia, you see this quite large decline, especially 
mortgages.  This is related to the conversion in both of these countries.  In 
Romania and
 
in Croatia, we have ongoing programs to convert the Swiss
 
Frank
 
mortgages into local currencies or euro, and this conversion is coupled 
with discount on principle, and this is the result of these declines on volumes.
 
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
8
 
 
 
 
On page 12, you see the deposit dyna
mics in the first quarter, minus 1 percent.  
This is what we are quite comfortable with.  Certainly, we don't want to 
increase deposit volumes on the Group level, given level of 
exc
ess liquidity.  
So, this is not a strategic priority at the moment.  
 
 
Now,
 
going back to the other items of the revenues, namely the net fee and 
commission income, this declined on a quarter
-
on
-
quarter basis by 11 percent, 
which is equivalent to HUF4.4 billion.  Now, this de
cline is usually seasonal.  
Each year
 
we see this diffe
rence and seasonal decline in the first quarter 
which comes from two sources; one is that usually spending and card usage 
activity is much lower in January than in December and the other one is the 
calendar effect.  
 
 
T
his year is a longer year, but Februa
ry is a shorter month, plus there is a 
peculiar item in Hungary which appears every year in the first quarter and this 
is the financial transaction tax related to card transactions, which you have to 
pay 
in 
a lump sum in the first quarter
; it was around
 
HU
F1.6 billion, and so 
this is something which always appears as a negative item in the first quarter.  
It did last year as well and this year, and therefore again creates the difference 
between the fourth quarter and the first quarter, and it should actuall
y create a 
positive difference in the second quarter as increase should be expected there.  
 
 
Therefore on this page, 
we
're actually comparing net fee and commission 
income to the first quarter last year.  So instead of quarter
-
on
-
quarter, we 
compare year
-
on
-
year numbers, and here you see a quite healthy trend, 4 
percent growth, mostly driven by the Hungarian business, 7 percent which is 
actually fundamental
,
 
mo
stly related to POS transaction revenues to card 
usage, card
-
related transaction revenues, which 
have gone up.
 
 
 
Also when the new loan origination picks up eventually in Hungary and starts 
to grow, this should contribute positively further to this number, and to some 
extent it's already there.  We have good growth in Bulgaria, 9 percent and then 
in 
Russia in ruble terms, the growth was 7 percent.  Again, we have this 
translation FX conversion impact to local currency, which makes this number 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
9
 
 
 
negative; otherwise it was actually 7 percent positive.  In Ukraine, we have 
growth.  So this is a revenue lin
e where we see quite positive trends.
 
 
 
Other net non
-
interest income improved quarter
-
on
-
quarter.  In Hungary, it 
was supported by FX gains and gains on other securities.  In Bulgaria, the 
negative is related to this intragroup swap deal, which kind of us
ually 
introduces a quarterly fluctuation.  And then Romania, I already referred to 
this line, this HUF1.7 billion improvement, which is entirely related to the 
base effect which appear in the fourth quarter last year due to one
-
off items 
which we described
 
on this page.
 
 
 
The cost dynamics, again usually, there is a seasonality in the first quarter.  
So, on a quarter
-
on
-
quarter comparison, we improved by 13 percent, which is 
nominally HUF12.7 billion.  Nevertheless, this is not a very meaningful 
comparison 
there on this slide.  You see the year
-
on
-
year numbers and year
-
on
-
year developments, both in nominal terms and FX adjusted.  So, 
nominally, there was 1 percent decline and FX adjusted, there was 1 percent 
growth, which was partially driven by the Hungaria
n increase.  There was 2 
percent increase in Hungary, which is related to this contribution to different 
funds and authorities.  We've talked about this before and we expect the 
contributions to the deposits and 
securities
 
protection funds and to the 
resol
ution fund to increase
 
and we book it quarter
-
by
-
quarter gradually.  So, 
this is an increase, which appeared and also other taxes increased and went up 
in Hungary.  There was an increase in amortization in Bulgaria and there is 
more of it.
 
 
 
In Russia, by 
the way even FX adjusted, we've had 15 percent decline year
-
on
-
year.  This is the result of the cost reduction program, the project which we 
concluded last year, which reduced our cost base in Russia considerably, and 
this actually contributes to a large e
xtent to our improvement in the 
profitability of the Russian bank.
 
 
 
Page 16, we are starting to dig deeper into some selected group members' 
situation starting with Hungary.  S
o, on page 16, you see the OTP 
C
ore P&L 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
10
 
 
 
items.  I've already talked about basic
ally each of these 
slides
.  So, I'm not 
going to repeat it.  
 
 
On page 17, you see a macro slide, which potentially needs some elaboration.  
The GDP growth number came out this morning at 9 o'clock.  
T
hat was 
actually after we produce
d
 
this slide, so, this
 
2.1 percent GDP growth 
expectation might look ambitious given the 0.9 percent year
-
on
-
year first 
quarter growth, and I would agree that this is indeed ambitious and it's only 
kind of a higher end of the potential spectrum of GDP growth, which we 
might exp
erience this year.  Nevertheless, we expect improvement in the 
second half of this year.
 
 
 
Let me just elaborate a bit mor
e.  We have two opposing trends 
manifesting 
this year.  One is the decline in the EU transfers and funds to Hungary, which 
is quite se
vere compared to last year, which was really a peek and boo and 
which is much lower than what we expect in 2017 and 2018.  So this is a kind 
of cyclical effect of the EU transfers utilization, and this then slides to lower 
level of investments and CapEx.  
Therefore, you see a lower level of expected 
investments to GDP.  This has an impact on the construction sector.  There 
was a quite sizable decline actually in the construction sector quarter
-
on
-
quarter in the first quarter, and this is due to the 
decline
 
of the EU funds.
 
 
 
On the other part, it's related to export growth.  And as you can see, we expect 
a moderation in the growth rate of exports, and that's due to the fact that the 
Euroz
one demand is somewhat lukewarm
 
potential
ly driven by Chinese 
demand. S
o
, with a
 
German demand in terms of production goods and exports 
from Hungary
 
was weaker
, and this is effective while the other weak sector in 
the first quarter was the production sector.  So these are the kind of negatives 
within the positive side.
 
 
 
We 
expect quite agile growth in household consumption.  It can even be 
higher than this 3.6 percent what we highlighted here given the quite strong 
real wage growth.  We expect 4.
8
 
percent real wage growth and all the other 
positive incentives, which are give
n to the retail sectors and also the speeding 
u
p of retail lending.  We see 
first quarter consumer loans were quite strong 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
11
 
 
 
and 
you see
 
4 percent growth in just one quarter.  This somewhat positively 
surprises us as 
well.  So we are just modifying and
 
incre
asing our own 
expectations and plans internally regarding how much we should sell, for 
instance, in the consumer loans, but also in mortgages.  So there are very clear 
signs of increasing consumption, which actually translate by the way to higher 
consumer 
loan growth than we originally expected.
 
 
 
And the other thing is the housing construction and the housing market, which 
is really booming.  So actually year
-
on
-
year Budapest was the highest
-
growing real estate price city in Europe.  So this has been a qui
te good 
investment if you 
bought
 
something a year ago in Budapest.  
 
 
And as you can see on this page, the number of new housing construction 
permits started to steeply increase and if you annualize the first quarter 
numbers, then we get to 19,000,
 
which i
s compared to last year figures of
 
12,500.  There's a considerable increase.  And actually, we expect an 
accelerating trend quarter
-
on
-
quarter.  So the annual number is probably going 
to be definitely higher than this 19,000.  
 
 
So these are the two factor
s; internal consumption growing more than 
expected, household sector growing, new construction growing, whereas on 
the other side, EU funds are less and therefore, construction industry 
somewhat slower or declining plus the EU demand is somewhat less.
 
 
 
There's another element here, the fiscal spending is increasing and there have 
been different programs announced and there seem to be definitely sizable 
room in the budget to increase spending, and we expect the government to do 
so and this will have impac
t already in the second half of this year, but most 
importantly next year.  So the expectations for next year certainly don't 
change.  We do expect at or above 3 percent growth for 2017 and also for 
2018, and growth might be somewhat less than 2 percent th
is year.  So that's 
the overall kind of macro, which might be for you as an insight.
 
 
 
Page 18, you see the activities in different segments in Hungary.  Mortgage 
applications continued to grow.  Number of new applications year
-
on
-
year 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
12
 
 
 
increased by 
almost 
70 percent, 
actually by 
69 percent.
  
Our share is still 
around 25 percent.  We target 26.5 percent this year.  
So, this is a prescribed 
stretched 
target we try to achieve throughout this year as well.  At corporate, 
we are quite strong.  You've seen the numbers, so we grew by 7 percent 
performing and actually 8 percent gross loa
ns, which increased our market 
share to 14.5 percent.  We've never seen these levels before, and we are quite 
happy with that.  And this is a strategy to continue to try to g
row
 
in corporate, 
which seems to be again more active than previously expected.
 
 
 
An
d these are just few highlights probably during the next session, the next 
con
f
 
call, we will elaborate more on these developments.  We already told last 
year that we started a new program to enhance our services to our customers 
in Hungary through digital
ization and new digital services and also improve 
our internal efficiency on working through digitalization, and these are some 
of the new services, which came out already to the market.  
 
We launched just one
-
and
-
a
-
half months ago a discount program, 
for 
customers who are OTP clients
 
using bank cards 
and 
eligible to that and we 
are recruiting retailers who are quite keen to join us.  We already had Tesco 
joining us and MOL, which is the oil company; DM, that's kind of 
drugstore 
and white goods chain, and t
his is about discounts and write
-
backs.
 
And 
already, we almost have 1
00
,000 clients registered and using this after 
one
 
month.  
 
We have this S
imple application, which again, I think, next time I will give 
you more information on this.  This is very exciti
ng and this is growing very 
fast.  This is kind of a metro application, through which different services are 
available; for instance, you can buy cinema tickets in almost 100 percent of 
the cinemas, you can buy tickets online by selecting the seat yourself
 
and you 
actually have the ticket.  You can do parking by just clicking three times, and 
it finds your location and you can order cabs and you can order food and buy 
tickets to various concerts and all the festivals which are organized in 
Hungary.  
 
There 
is a new online account opening for SMEs, which immensely simplify 
and fasten the process.  We have a new payment engine for the utility bills.  
We have mobile POS application to make card acceptance cheaper for our 
corporate clients, and so on and so on.
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
13
 
 
 
 
 
So, we're quite active in coming out to the market with new innovations in 
terms of services and we believe that the next couple of years in Hungary will 
be about actually market development because volume growth started and we 
have already launched a lo
t of new type of services and applications for our 
customers.  And there's a lot in the pipeline, which will come out during the 
next 1.5 years.  So, we believe that we can further improve our market 
positioning in the country.
 
 
 
The next slide is 
Bulgaria
, I think I mostly touched up this part.  There was 
a 
decline in the total income due to the lower
-
margin environment and lower net 
interest margin.  Risk cost was quite favorable, HUF1.5 billion; the risk cost 
rate 0.5 percent.  I think this is the level 
where we should be or this is a 
potential level where we could be in the future, I would rather say that, given 
the risk environment in the country.  And as you can see, we have 
improvement in corporate and SME loans especially both in mortgages and 
consum
er loans, new sales increased.
 
 
 
And then a few words about Russia on page 21, Russia started to do well.  It 
makes profits.  Again in HUF terms, it's not so spectacular
, but
 
the ruble just 
weakened.  In ruble terms, the improvement is even stronger and a 
key driver 
here is obviously the risk cost.  On page 21 in the lower right corner, you see 
the risk cost rates by the major products we have.  POS is down to 7 percent, 
that's quite good.  This is hopefully the level, which we will see in the future.  
 
 
Cr
edit cards, still high and we hope that this is going to continue to go down.  
But again in credit cards, we really do
n't have new vintages.  So, we 
technically
 
stopped credit card selling at the beginning of 2015, and we 
haven't really restarted it in a l
arger scale.  So, this is all the problems of the 
old vintages and the old loans.  And once we restarted this business with the 
previous magnitude, which given the seemingly improving environment in 
Russia especially starting from the second part of this y
ear, it might come 
sooner than we originally expected.  Cash loans, I mean, below 10 percent risk 
cost rates.  So this is okay.  At this level, this is a reasonably profitable 
product.
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
14
 
 
 
 
 
Page 22, so you see the market dynamics.  POS sales were RUB11 billio
n in 
the first quarter, which is quite a spectacular growth compared to last year, 
which was RUB8 billion in the first quarter and getting close to the 2014 
numbers, which were RUB12 billion.  So it seems clear that last year was the 
bottom of the cycle an
d this year at least in POS, we can do better.  
 
 
Also in this slide, you can see that we haven't really restarted the credit cards.  
They continue to decline the volumes and the cash loan is somewhat more 
active than last year and very important factor fo
r performance here is on this 
slide as well.  That's the cost of deposits, which went up to quite a some extent 
last year and now started to normalize back.  
 
 
So now the total cost of deposits is down to 7.9 percent, so below 8 percent, 
and this is due to
 
the phasing out of the very expensive term deposits, which 
we had to make last year, and these were typically 12 months or six months
 
term deposits
.  And as they phase out from our books, we expect further 
improvement in the cost of deposits and therefore
 
in the margins in Russia.
 
 
 
Now Ukraine, nothing spectacular happened actually, except that there were 
no negative one
-
offs.  And if there are no negative one
-
offs in Ukraine, then 
Ukraine
 
is doing reasonably okay and produces positive results as it did last 
year in the second quarter.  If you remember last year's second quarter, 
Ukraine was positive because tha
t was a quarter where there was
 
no FX 
de
valuation, and we didn't provision extra
 
for the old volumes and as long as 
there is no further stronger 
de
valuation of the currency and no major 
disruption on the market or in the prevailing conditions around us.  This is 
what we expect in Ukraine, a moderate, but growing profit.  And in fact o
ur 
vulnerability to exchange rate changes has been reduced considerably.  There 
is hardly anything left from the previous dollar
-
based
 
mortgage book and our 
corporate lending is mostly in local currency
,
 
as well.  So, we are reducing 
fast our exp
osure to 
FX risk in the country
 
stemming from FX assets we have.
 
 
 
Page 25, the summary about the risk indicators.  So the risk cost rate 
on 
group 
level 
was 
down to 131 basis points, very good level.  We're quite happy with 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
15
 
 
 
it whereas the portfolio, the NPL ratios 
stayed flat.  Coverage slightly 
declined, but this is 
again 
mostly due to the
 
weaker ruble and hryvna rates 
in 
the first quarter and therefore 
there
 
is smaller contribution of the very high 
coverage level of Ukrainian and Russian non
-
performing portfolios 
for the 
overall coverage level and the group level.
 
 
 
Now, Page 26, you see the portfolio worsening dynamics.  The good thing is 
that Russia was only HUF17 billion.  Usually, the first quarter is worse than 
the other quarters;
 
 
that's the usual seasonality
 
if nothing else happens because 
we have a high level of new origination in the last quarter and then the high 
level of defaults in the first quarter, but now it was quite 
a 
mild increase.  We 
had some corporate defaults in Hungary and in Romania.  These w
ere the 
other two countries where there was material deterioration of the portfolio.
 
 
 
Page 27 shows the risk cost rates by countries.  So, Hungary was down to 
pretty much zero; Bulgaria 0.5 percent; Russia came down to 10 percent 
overall; and Ukraine is d
own to 4.4 percent.  And this is pretty much the entire 
presentation in terms of guidance and forward
-
looking statements.  I've 
already said that we are modifying our guidance related to net interest margin.  
We expect around 25 basis points decline over t
he whole year compared to 
last year, as opposed to the original guidance, which was around 20 basis 
points.  And the other guidance we said was related to this return on equity 
expectation for 2017.  And we continue to believe that we are on the right 
trac
k to achieve that given that the without bank tax return on equity during 
the first quarter was 15.5 percent, already this quarter, so this actually makes 
us feel confident that we can potentially deliver on this target.
 
 
 
And basically that was a formal p
resentation, and I'm more happy to try to 
answer your questions.  So operator, please open the floor for questions.
 
 
Operator
:
 
Certainly.  As a reminder, if you wish to ask a question, please press star and 
one on your telephone and wait for your name to b
e announced.  If you wish 
to cancel your request, please press the hash key. 
 
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
16
 
 
 
Your first question comes from Pawel Dziedzic from Goldman Sachs.  Please 
go ahead.
 
 
 
Pawel Dziedzic
:
 
Good afternoon and thank you for the presentation.  Just few quick question
s 
from my side.  The first one is on loan growth.  So you stated clearly that 
you're expecting inflection point in mortgage lending in Hungary, but could 
you perhaps comment what sort of growth rates you are thinking about in one, 
two
-
year's time?  And als
o separately, do you think that the strong growth in 
commercial lending, so both SMEs and corporates this quarter is sustainable?  
Were there any large ticket transaction that can perhaps distort a little bit of 
growth rates for the last three months?
 
 
 
Th
en I have a question on your operating expenses.  You mentioned that the 
performance in Hungary, Russia and Romania as well were very good.  
Should we look at those as a sustainable run
-
rate going forward or whether 
any seasonal effect that could perhaps b
e taken into account?  And also where 
do you see any cost saving potential across the group at this stage?  And I 
leave it with that.  Thank you.
 
 
Laszlo Bencsik
:
 
Thank you fo
r the questions.  So, mortgages:
 
our original expectation for this 
year was still
 
declining mortgage volumes.  Given the higher
-
than
-
previously 
expected demand what we see today in Hungary, it might happen that 
somewhere potentially closer to the end of this year, we might be able to stop 
the decline of the portfolio in mortgages, that
 
would be fantastic.
 
 
 
Consumer
 
book:
 
this 4 percent
 
q
-
o
-
q
 
growth
, 
well, 
I don't think that we are 
going to grow each quarter by 4 percent.  This is partially related to the base 
effect at the end of the year.  There was a drop in the consumer 
loan volumes
 
d
ue to the fact that the bonuses were paid in December and that was kind of 
one
-
off decline, but certainly what we see now is well above our expectations 
in terms of the potential new sales we can do and therefore, again we don't 
expect quarterly 4 percent 
growth, but we expect quarterly growth in this 
portfolio.
 
 
 
Corporate
 
book:
 
yes, there were obviously bigger tickets and these bigger 
tickets are always kind of either they come or not, I mean you can't 
take 
them
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
17
 
 
 
granted
, but the pipeline is strong
. W
e don
't expect quarterly 7 percent or 8 
percent growth in corporate loans, but we expect further growth in corporate 
volumes in Hungary,
 
that's clear.
 
 
 
N
ow your question related to OPEX
, each year, we have this s
easonality, 
right.  I
f you look back to the last
 
couple of years, you always s
ee this 
seasonality and the OPEX
 
in the first quarter is lower and then
,
 
the subsequent 
quarters increased
, whereas
 
the last qua
rter
 
is a kind of spike and a higher 
number.  Therefore, I suggested to compare the first quarter 
this year 
rather to 
last
 
year first quarter and the growth was 1 percent
 
FX adjusted
. 
 
 
So, I think this is a number, meaning 
the FX adjusted one
, we have 1 percent 
overall growth in 
OPEX.
 
I 
would 
stick
 
to 
our
 
previous guidance on this when 
we said that we expected similar F
X adjusted growth this year what
 
we had 
last year, so potentiall
y around 2
-
3
 
percent
.
 
 
 
Cost saving potentials, this is not what we are foc
using on at the moment.  
There're
 
always opportunit
ies here and there, and 
even 
we do have
 
cost 
reduction initiatives,
 
currently 
this is not the main target.  We see in Hungary
 
a reviving environment coupled with
 
increasing demand.  We are very hopeful 
that Russian demand for loans will increase as the Rus
si
an environment 
improves.  Let me
 
remind you that last year we made a huge cost reduction 
program in Russia.  Certainly, we would be actually quite happy to increase 
the cost base in Russia, if it 
is coupled
 
with sizable volume growth.
 
 
 
Likewise, Ukraine
, we did a very drastic cost reduction program in Ukraine.  
This is not very evident, if you look at the numbers we have here, but given 
the level of inflation during the last three years, which was close to 100 
percent, then actually keeping the levels is
 
a big achievement in Ukraine.  So 
this is not our main focus.  We do still expect realizing all the cost synergies 
from the acquisition in Romania, so that's ongoing throughout this year, and 
there will be some late impact from this in terms of improvemen
t, but other 
than that no major changes in terms of cost efficiency improvements expected.  
We a
re actually kind of switching our mindset
 
into a growth mode, which 
makes us actually much happier than just cutting costs.
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
18
 
 
 
 
Pawel Dziedzic
:
 
And that's very hel
pful.  So in other words, we should not look into 1 percent 
decline
, FX adjusted this quarter as a run rate, you would rather stick to 2 
percent, 3
 
percent
 
increase 
going forward as indicated previously?
 
 
Laszlo Bencsik:
 
Yes.
 
 
Pawel Dziedzic
:
 
Thank you.
 
 
O
perator
:
 
Thank you.  Your next question comes from the line of 
Simon Nellis, 
Deutsche Bank.
  
Please go ahead. 
 
 
Simon Nellis
:
 
Hi, Mr. Bencsik.  It's actually Citibank, but that's okay.  Yes, my first question 
would be just on the margin outlook in Hungary.
  
I think you did mention that 
you're looking for a bit larger contraction, but could you give us some steer on 
where the margin in Hungary this year is expected to go and actually also in 
Bulgaria, there was a pretty steep drop, so maybe a little more on 
those two 
markets?  And then maybe I can ask my other questions afterwards?
 
 
Laszlo Bencsik
:
 
In Hungary
 
there was indeed a steep drop.  It went down to 3.43 percent.  And 
the second quarter will be 
even 
lower, so there we expect further drop and 
then start
ing from the second half of this year, we expect the volume growth 
to counterbalance the pressure on the margin.  By volume growth, I mean the 
asset base remaining the same, but kind of converting our liquid reserves into 
loans,
 
so basically increasing the
 
margin on the asset side by doing more 
le
nding.  T
he expectation for Hungary is that the second quarter will be 
further down and the second half of the year should actually show some 
improvement, at least that's the current expectation what we have.  And 
if this 
happens then on a yearly basis, we might expect something similar to the first 
quarter level.
 
 
Simon Nellis
:
 
For the full year?
 
 
Laszlo Bencsik
:
 
Yes.
 
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
19
 
 
 
Simon Nellis
:
 
Right, in Hungary, okay.  And for the group, you're basically guiding for 
around 25
 
basis points?
 
 
Laszlo Bencsik
:
 
Yes.
 
 
Simon Nellis:
 
Okay.
 
 
Laszlo Bencsik
:
 
Overall, year
-
on
-
year decline.  So, that's not compared to first quarter.  That's 
compared to last year.
 
 
Simon Nellis:
 
Right.  And can you give us a little color on the yield on 
the existing 
mortgages, kind of the back book and what the yield is on the new production 
that you're doing?  And maybe also give us some color on the yields in 
Hungary on corporate
,
 
consumer and mortgages?  I'm trying to figure out as 
the expected growth 
in mortgage, what's that actually going to do
 
to your 
margin and likewise, i
s fast growth that you are seeing in corporate that really 
help or is that much lower margin business than what you have historically 
done?
 
 
Laszlo Bencsik
:
 
You 
don't seem to belie
ve me, right?
  
I just told you 
--
 
 
Simon Nellis:
 
Kicking with higher, right, so to speak.
 
 
Laszlo Bencsik
:
 
The yield of the new production in mortgages is very similar to the yield on 
the converted mortgages, right.
 
 
Simon Nellis:
 
Okay.  And what's that 
exactly?
 
 
 
Laszlo Bencsik
:
 
Around 4.5 percent, and this is the spread actually.  So, this is not the yield.  
This is the spread.  And then it's certainly lower than the very old subsidized 
HUF mortgages, which have been declining for the last 10 years now.
  
So, this 
is something which is not a new development.  
As for t
he corporate spreads, 
large corporate spreads are around 2 percent.  SME spreads, well, they 
ac
tually 
should increase because for the last two years, we mostly sold loans 
under this lending f
or growth program where the spread was capped at 2.5 
percent.  
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
20
 
 
 
 
Now, this is phasing out.  It's existing, but the new volumes are quite small.  
So, the actual market rates are somewhat higher than 2.5 percent spread.  So, 
the micro, small, medium spreads 
of new production actually increased 
compared to what we saw during the last two years, and large corporates 
between 1 percent to 2 percent spread.
 
 
Simon Nellis
:
 
Right.  And on the consumer side, just finish it off.
 
 
Laszlo Bencsik
:
 
Consumer is really jui
cy.  So, that's a very good business.
 
 
Simon Nellis
:
 
Okay.  And then maybe one last question just on Touch Bank.  You 
mentioned in the past that you were thinking of rolling it out elsewhere.  Is 
that happening or what's the 

 
 
Laszlo Bencsik
:
 
No, not yet.
  
First, we want to see this to succeed, right.
 
 
Simon Nellis
:
 
Right.
 
Thanks so much.
 
 
Laszlo Bencsik
:
 
Thank you.
 
 
Operator
:
 
Thank you.  Your next question comes from the line of 
Gabor Kemeny, 
Autonomous Research
.  Please go ahead. 
 
 
Gabor Kemeny
:
 
Thank yo
u.  
M
y first question on Romania, I think you mentioned that 20 
percent of your clients decided not to participate in this FX conversion 
scheme.  I recall you assumed more like 100 percent participation when you 
set aside the provisions for this scheme.  S
o, do you have some room for 
provision write
-
backs here.  And secondly, maybe if you can follow up on the 
profitability of the overall Hungarian business, how would you expect the 
overall profitability of OTP Core to evolve from here?  I mean, your 
provisi
oning was not too far from zero in the first quarter.  I guess, you 
mentioned that loan growth could accelerate somewhat in the second half.  
You are not really targeting 
cost
 
growth.  If we put these together, it could be 
helpful if you could give us a se
nse how the overall profitability of this 
business could develop.
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
21
 
 
 
 
Laszlo Bencsik
:
 
So, regarding Romania, yes, when you do these voluntary programs, there is 
always a certain share of customers who don't want to do it.  Now, there can 
be two reasons why th
ey don't 
participate
.  One is that they don't want to do it 
because they go to court and they try to have a larger discount by going 
through at least a legal process.  And then, you have another type of 
customers, 
who don't care
 
either because they don't c
are or because the 
volume of the loan is so small that it's not worth 
going 
to the branch and do 
the paperworks.  
 
 
Now obviously for those clients who proceed with the legal 
action
, we do 
h
ave to have the provision there. T
he very reason we did this progr
am was 
that 
there had been a very considerable threat that a very large proportion of 
our clients actually go through the legal process and we might lose actually 
much more than the discount we gave to these customers, right.
 
 
 
So I believe it's quite reas
onable to keep the provisions for those clients who 
decide to pursue legal actions against the bank.  And for those customers who 
just don't do anything, yes, we will release provisions probably, but we don't 
know it yet.  So this is not going to happen in
 
the second quarter.  Maybe b
y 
the end of the third quarter 
we are going to have a clear picture
. W
hen the 
program is over we will see exactly which clients are going to proceed with 
legal actions, right.  So not in the second quarter and not in the third 
quarter, 
but probably at the end of the third quarter, we might be in a position to 
reassess the situation.
 
 
 
Core profitability 
I already said 
what we expected for the margin.  Volume 
growth should happen this year.  It already happened during the first q
uarter 
and seeing the market demand, it should continue during the course of this 
year.  It's going to be still low
-
single
-
digits, lower than 5 
percent overall 
growth
 
in the volumes in Hungary, but it might be actually higher, so the 
second half might be h
igher.  I really don't know because we were positively 
surprised actually by the first quarter, especially the consumer loan 
developments and the current demand for consumer loans, that clearly 
exceeded our previous expectations.  So
,
 
I don't know actually
.  I
t might 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
22
 
 
 
continue to surprise 
us 
positively, bec
ause there's a strong real wage
 
growth 
and the mood is relatively good.  Real estate price is going up and so on and 
so on.  So this might increase spending.
 
 
 
Risk cost, I've said it before, as I expect s
tructurally lower level of risk costs 
not just for this year, but for the next period in Hungary, which might be next 
two or three years, even more.  It may not be zero, but it should certainly be 
low 
and
 
I don't see any reason why it should be high number
.  
T
he cost 
base, 
we have already touched upon
, so these are more or less the 
moving 
parts.  
As 
I said 
we
 
expect further decrease in the margin in the second quarter.  So 
revenues might decrease in sec
ond quarter and then hopefully 
and hopefully 
the revenue trend bottoms out 
in the 
second quarter this year; that would be
 
our
 
kind of optimistic expectation.  And then, we should see revenue growth 
driven by volume growth, despite the lower interest rate environment.
 
 
Gabor Kemeny
:
 
That
's very clear and I guess
 
that the risk environment is very benign and you 
have a high NPL coverage.  Can you give us any sense where maybe a range 
where this 
--
 
where would you see your provisioning in the, let's say, two 
years?  I mean, in the domestic b
usiness?
 
 
Laszlo Bencsik
:
 
Sure.  I don't see why 
the risk cost rate
 
should be higher than 50 basis points.  
So, it's somewhere between zero and 50 basis points.  We will see.  The other 
question is, how much we can recover?  Because seeing the strong 
devel
opment in the real estate market, we're certain 
about positive 
developments. F
or many years, there was a moratorium on foreclosure, right?  
So, it was 
fairly
 
difficult to work out the non
-
performing mortgage portfolio 
and the market was also quite sluggish
.  Now, this has changed a lot, and now 
we have a very dynamic real estate market where prices are going up and 
there are no further restrictions on foreclosures 
or
 
doing proper work out in 
this area.
 
 
 
So again, this can be a rather positive surprise if we manage to have higher 
recoveries on the mortgage portfolio than the original provision.  And if that 
happens, then we might be able to actually write back provisions and risk 
costs can even be positive
.  But what I can say officially about the level of 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
23
 
 
 
provisions is that it's adequate and proper and in line with our expectations to 
eventual credit losses.  But 
there 
can be a positive surprise seeing the 
developments in the environment.
 
 
Gabor Kemeny
:
 
An
d when you say up to 50 basis points, you don't assume any substantial 
write backs there?
 
 
Laszlo Bencsik
:
 
Certainly, no.  If you look at the portfolio, it's not deteriorating, technically.  
And then there are possible write
-
backs.  On the other hand, we f
ind it prudent 
to have some levels of provisioning.  And there's IFRS 9 coming in 2018.  So, 
there can be other factors.  But, I think, what I can say for certain, I expect a 
lower risk environment in Hungary and
 
I don't see any reason why it sh
ould 
change
 
for the next two years or three years.  Elections come in 2018.  So, 
next year will be quite strong in terms of GDP 
as well as 2018
.  So, we are 
going to see, I believe, two very dynamic and prosperous years in the country 
in which case, risk costs should
 
be quite low.
 
 
Gabor Kemeny
:
 
I have one final question.  I think you accrued about HUF13 billion for 
dividend payment in the first quarter.  Could this be any kind of indication of 
how management thinks about the dividend payout next year?
 
 
Laszlo Bencsik
:
 
Yes.  If you multiply it by four, then you roughly get to the number which is 
our initial thinking about the potential levels of dividends.  But obviously, this 
is not final.  This is just an indication, but I think a good indication.
 
 
Gabor Kemeny
:
 
Okay
.  Thanks very much.
 
 
Operator
:
 
Your next question comes from the line of 
Alan Webborn, Societe Generale.
  
Please go ahead. 
 
 
Alan Webborn
:
 
Thanks for the call.  
Could you put a little bit of color on where the sort of 
corporate lending demand is coming fr
om?  Is it more private, large 
corporates?  Is it investment loans?  Is it states?  Just to give an idea as to 
where that's coming from.
 
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
24
 
 
 
 
And you started the call by telling us that you're revising down your GDP 
because of this sort of maybe EU investment
 
hiatus, and I just wondered, 
should we be a little concerned that's being a sort of rush and there could be a 
little more caution as if 
--
 
at least in the short term, the economy is weakening.  
So, that would be really helpful to understand what the corpo
rate lending 
dynamics are looking like, in Hungary in particular.
 
 
 
And secondly, perhaps a little bit of a view in terms of how the competitive 
environment is developing.  You paint a quite positive picture of the dynamics 
of the banking economy and you t
alk about juicy consumer margins.  Then, 
capital tends to move to where juicy margins are.  Do you feel there is more 
competition coming in in unsecured retail or anywhere else in your major 
markets, particularly again in Hungary?  That would be interestin
g to hear 
your view on that.
 
 
 
And I guess finally, where are you sort of from an investment perspective in 
your digitalization process?  The sort of back
-
end and front
-
end 
--
 
you put a 
lot of impressive applications on your slide, but I wonder where the G
roup is 
in terms of where it want it to be and when it gets to a point where that 
investment can start paying dividends in terms of cost efficiencies?  Again, 
your view on where you are in that process would be helpful.
 
 
Laszlo Bencsik
:
 
Related to corporat
e:
 
the micro and small growth was 2 percent in the first 
quarter.  So, that's just the very plain vanilla lending to micro and small 
corporates, and there is no one
-
off there.  And so this is what we expect to 
continue pretty much, and as a quarterly growt
h, 2 percent, this is already very 
strong.  There were some large corporate deals.  There was one big 
commercial factoring deal, for instance.  This is one of the 
particular 
business 
lines
 
which we are trying to develop
 
strategically
, I mean the
 
commercial
 
factoring.  So, it was a mix.
 
 
 
The
 
kind of underlying growth was roughly 2 percent, and then it went up to 7 
percent by some bigger tickets, but these bigger tickets, they don't come every 
quarter.  Therefore, I said that it's obvious that we are not goi
ng to grow by 7 
percent, 8 percent quarterly because then the annual growth rate would be,
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
25
 
 
 
well, I don't know
.  So, this is not going to happen, clearly.  But a good 6 
percent to 8 percent, overall 10 percent growth in corporate, that should be 
possible.  
 
 
Now, the 
corporate lending dynamics
, around 6 percent to 8 percent growth in 
micro, small, which is the kind of less volatile part, and then on top of that, it 
can be pretty much around 10 percent, anything plus/minus, depending on the 
other corporate 
and kind of large corporate growth.  It can be actually double
-
digit growth for the full year.
 
 
 
A
gain, the bigger tickets in the first quarter were partially commercial, 
partially related to kind of state enterprise funding.  This is as well
, 
a 
developing
 
area because quite a number of utilities, energy companies and so 
on now belong to the state sector.  So, really big ticket investments and 
developments are expected on that front.  By the way, a huge share of the 
funding of the corporate sector is done c
ross
-
border.  So, the structure of the 
large corporate lending in Hungary is such that a large share of corporate 
lending is not done through the Hungarian banking sector, but 
rather through
 
group funding from the parent companies somewhere in Europe, typi
cally.  
 
 
And this is not going to be channeled through the Hungarian banking sector, 
that's clear.  It will remain as cross
-
border lines.  So, the kind of larger ticket 
growth potential is in the state
-
owned sector, which actually increased a lot 
during t
he last couple of years.  I don't know how much you follow the 
process, but they basically re
-
privatize
d
 
the utility sector mostly, and there are 
large investment plans.
 
 
 
By the way, the fiscal room is huge for state development.  If you look at the 
budget, it looks phenomenal, and certainly the next few years will provide 
opportunity to more spending and still 
keeping fiscal deficit
 
below 2.5 
percent
.
 
 
 
 
Now, 
on 
competitiv
e dynamics, I would describe the environment as healthy 
in terms of competition.  Everyone is trying to grow and compete, but we 
don't see crazy behavior, neither in pricing nor in risk taking.  How long it's 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
26
 
 
 
going to last?  I do not know.  Certainly, we h
ave two type of players in 
Hungary.  Some of them have already kind of doing okay returns or coming 
back to okay levels of profitability.  And then, we have some which are still 
not doing very well.  Part of them are state
-
owned like MKB, part of them are 
not state
-
owned, but there is clearly a big appetite for profits and returns as 
opposed to market share, I would say.  And given the losses during the last 
couple of years, I think now certainly
 
there is
 
a 
strong 
desire to recover at 
least part of those lo
sses for our competitors.  This makes us somewhat 
hopeful that no one will start a crazy price competition or something like that, 
and I certainly don't expect new players, at least short
-
term, to come to the 
market.  But this is obviously hard for us to j
udge how the competitive 
dynamics is going to evolve in the future.
 
 
 
Digitalization, again I think next time, I'll elaborate more on this topic because 
this is something we are very excited about and devoting a lot of effort, 
energy and money to develop v
arious digital services and to actually make an 
internal digital transformation as well because we are working on two fronts.  
Obviously, one is the external part, the services we provide to our customers, 
and the other front is the internal processes, how
 
we manage and conduct 
business internally.  And on both fronts, there are a number of initiatives.  We 
have more than 100 different individual projects under this umbrella only in 
Hungary, and some of the results are already out in the market, so you see 
that.  
 
 
And I think, I will try to be more specific on this and prepare a few slides 
about this for the next presentation.  But clearly, this is something where we 
focus, and we have a program which we laid down in the beginning of last 
year and we are ex
ecuting it.  So, we know where we're growing and we 
believe that this is going to elevate our service level to a different platform 
and our target is clearly to continue to stay ahead of the competition in 
Hungary.
 
 
Alan Webborn
:
 
Okay.  That was very inter
esting.  Thank you very much. 
 
 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
27
 
 
 
Operator
:
 
Thank you.  Your next question comes from the line of 
Stefan Maxian, RCB.
  
Please go ahead. 
 
 
Stefan Maxian
:
 
Thank you.  Good afternoon.  
Just a few questions from my side.  First, you 
talked about this stronger co
rporate loans in Hungary, and with regard to the 
larger tickets as well.  Why has been the fee line actually 
--
 
the corporate fee 
line in Hungary a bit weaker, if you look at the year
-
on
-
year development?  
Has there been a special reason for that?
 
 
 
The se
cond on AXA actually, can you give us more clarity when you expect 
closing of this?  And if there would be some 
--
 
maybe give a little bit of 
guidance, if there are some special costs related to that, or if we might even 
see a positive consolidation effect
 
as you brought that portfolio quite cheaply.
 
 
 
And then just for clarification on the Visa Europe transaction, what is 
--
 
again, 
I don't know if I got it right, what's the amount that you will book in the P&L 
later this year and how much of that has been 
already accounted for in equity 
last year via revaluation gains?
 
 
Laszlo Bencsik
:
 
So, corporate fee, I see this number on page 13 of the interim report.  I have to 
check.  I mean, there is no obvious answer I can give you at the moment.  I 
have to check th
is.  I think, there is some one
-
off or irregular item behind this 
because there is no obvious reason.  We are going to check it and come back 
to this, okay?
 
 
Stefan Maxian
:
 
Okay.
 
 
Laszlo Bencsik
:
 
Regarding AXA, we are going to conclude the transaction by 
the end of this 
year.  And what we have said was that we expect the volumes will increased 
by 20 percent, the mortgage volumes.  Obviously, there are some repayments 
by that time
, so
 
the performing volumes are a bit lower.  
Consequently,
 
it's 
somewhat less
 
than 20 percent.  And what we expect is an increase from then 
on in the revenues.  
H
onestly, we haven't communicated the structure, how 
this is set up and how exactly the pricing is done.  So, if you excuse me, I'm 
not going to elaborate on this.  But onc
e we close the transaction, it's going to 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
28
 
 
 
be more or less obvious with what discount and what pricing parameters we 
acquired that portfolio.
 
 
 
Visa Europe, the P&L 
impact
 
is going to come somewhere during the second 
half of 
this
 
year.  It appeared in the c
omprehensive income during the fourth 
quarter
 
last year
, so it's part of the equity.  And the amount is this, what we 
said, 
EUR
34.2 million.  This is wh
at
 
we booked into the equity and it will 
appear in the P&L somewhere during the second half of this year
.  This was 
the initial amount which we were told we would get as an initial cash payment 
and this is the amount which is going to increase because it's structured in a 
way that there's an initial payment and then there is an earn
-
out component.  
And the e
arn
-
out component is going to be less and the initial payments will 
be more, but we don't know yet how much more and much less.  So, it should 
be more than EUR34.2 million, but we don't know how much more.  It's 
already in the equity
 
since
 
the fourth quart
er last year and it's going to come 
through the P&L somewhere 
in the 
second half of this year.
 
 
Stefan Maxian
:
 
And maybe one final clarification, you talked about this sp
ecial tax that is 
booked in OPEX
 
and that should disappear from next year on, right?
 
 
Laszlo Bencsik
:
 
Yes.
 
 
Stefan Maxian
:
 
So, that w
ill be HUF1.7 billion lower OPEX
 
from the special tax?
 
 
Laszlo Bencsik
:
 
No, that's actually the after
-
tax impact.  So, there w
ill be HUF2.1 billion lower 
OPEX
, and the bottom line after
-
tax impact will be HUF1
.7 billion.
 
 
Stefan Maxian
:
 
All right.  Thank you.
 
 
Laszlo Bencsik
:
 
Thank you.
 
 
Operator
:
 
Thank you.  There are no further questions at this time, please continue.
 
 
Laszlo Bencsik
:
 
Okay.  Well, thank you very much.  Thank you for joining us today.  Thank 
y
ou for your interest.  I wish you all the best, and I hope you'll join us during 
the second quarter conference call, which will be on 
12 
August.  I wish you all 
 JPMORGAN
 
Moderator: 
Paul Formanko
 
05
-
13
-
16/14:00 GMT
 
Confirmation # 
958739
 
Page 
29
 
 
 
the best and a good vacation if you go for the summer, and thank you again 
for joining us.  Bye
-
bye.
 
 
Operator
:
 
And that concludes our conference for today.  Thank you all for participating.  
You may all disconnect.
 
 
 
 
 
END
'''
sentences = [Sentence(sent, use_tokenizer=True) for sent in split_single(AText)]

```
at above line I am getting Error, let me know if you need complete Code

**Expected behavior**
It should run and give Entities

**Screenshots**
If applicable, add screenshots to help explain your problem.

**Environment (please complete the following information):**
 - OS [Windows]:
 - Version [flair - 0.5]:

**Additional context**
Add any other context about the problem here.



Discussion:
Interesting. If we do 

```python
for sent in split_single(AText):
    print(sent)
    Sentence(sent, use_tokenizer=True)
```

we find that the problematic sentence is this line:
```console
n't have new vintages.
```

It seems that `segtok` is somehow producing an empty additional token for `n'`t. 

Resolving patch:
diff --git a/flair/data.py b/flair/data.py
--- a/flair/data.py
+++ b/flair/data.py
@@ -1338,6 +1338,8 @@ def segtok_tokenizer(text: str) -> List[Token]:
         contractions = split_contractions(word_tokenizer(sentence))
         words.extend(contractions)
 
+    words = list(filter(None, words))
+
     # determine offsets for whitespace_after field
     index = text.index
     current_offset = 0


Test patch:
diff --git a/tests/test_data.py b/tests/test_data.py
--- a/tests/test_data.py
+++ b/tests/test_data.py
@@ -72,6 +72,10 @@ def test_problem_sentences():
     sentence = Sentence(text)
     assert len(sentence) == 10
 
+    text = "n't have new vintages."
+    sentence = Sentence(text, use_tokenizer=True)
+    assert len(sentence) == 5
+
 
 def test_token_indices():