Hungary's OTP Bank said on Monday it will not pay a dividend on 2007 earnings and expected its operating environment to remain difficult in 2008, Reuters reports.

OTP, which made a consolidated net profit of 208.55 billion Hungarian forints ($1.27 billion) in 2007, earlier said it targeted a dividend payout of 30 percent of after-tax profit and paid a dividend of 144 forints per share a year earlier.

The company did not explain its decision and officials could not immediately be reached for comment.

OTP said it continued to forecast its net profit would rise by over 10 percent in 2008 and lending to expand by 25 percent.

But it said the economic environment in Hungary, its largest market, will remain difficult while most other countries it operates in will face slowing growth and accelerating inflation.

Business growth is seen driven by its Russian unit, which is forecast to increase its net profit by around 50 percent. In Ukraine, OTP expects net profit to rise by more than 30 percent.

At 0755, OTP traded up 2.2 percent at 6,950 forints per share. OTP shares have fallen 36 percent from its peak last summer on poor international sentiment towards the banking sector.

Analysts said OTP's decision not to pay a dividend was negative. They also said OTP's decision may be in preparation for a new acquisition in Russia.

In Hungary, OTP expects economic growth to accelerate to around 2 percent from 1.3 percent last year.

Lending is seen up 16.6 percent and deposit growth is forecast at 8.2 percent, OTP said. Lending growth is seen driven by consumer lending and consumption-related home equity loans, which should push mortgage lending up by 18.2 percent.