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Komercni Banka (KMCA)

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Monday 28 February, 2005

Komercni Banka

Further rePreliminary Results

Komercni Banka
28 February 2005

Komercni banka, a.s. http://www.kb.cz/en
Prague 1, Na Prikope 33, building identification number 969, Post Code 114 07
Identification No.: 45 31 70 54
incorporated in the Commercial Register maintained with the Municipal Court in
Prague, section B, insert 1360



                PRELIMINARY UNCONSOLIDATED AND UNAUDITED RESULTS

                            OF KOMERCNI BANKA, A. S.

                      FOR THE YEAR ENDED 31 DECEMBER 2004

                                  INTRODUCTION

In accordance with the requirements of the Prague Stock Exchange, Komercni
banka, a. s. (the 'Bank') announces its preliminary, unconsolidated and
unaudited results for the year ended 31 December 2004, prepared in accordance
with International Financial Reporting Standards (IFRS) and Czech Accounting
Standards (CAS). The management will announce its full-year audited results on
29 March 2005.

According to International Financial Reporting Standards (IFRS)
(CZK million)                                        December 31, 2004        December 31, 2003       December 31, 2003

                                                                              Pro forma*
Net banking income                                               22,717                  21,751                  21,844

Operating costs                                                 -11,792                 -11,750                 -11,750

Net operating income                                             10,925                  10,001                  10,094

Cost of risk                                                      1,341                   2,473                   2,473

Profit or loss on subsidiaries and associates                       889                     716                     716

Income taxes                                                     -3,853                  -4,021                  -4,021

Net profit                                                        9,302                   9,169                   9,262

Total assets                                                    448,298                 447,658                 447,565

Total shareholders' equity                                       43,707                  40,492                  40,399

ROAE                                                              22.1%                       -                   25.0%

Cost/Income ratio                                                 51.9%                   54.0%                   53.8%

* Pro forma restatement of the fair value changes of available-for-sale
securities, which had been included in the profit and loss statement through the
end 2003. Since 1 January 2004 they started to be reported in the equity. The
2003 was restated to be comparable with 2004 result.

According to Czech Accounting Standards (CAS)
(CZK million)                                                  December 31, 2004                      December 31, 2003

Profit before taxes                                                      13,311                                 13,326

Income taxes                                                             -3,876                                 -4,016

Net profit                                                                9,435                                  9,310

Total assets                                                            448,209                                451,397

Share capital                                                            19,005                                 19,005

The Annual General Meeting (AGM) for the year ended 31 December 2004 will take
place on 28 April 2005. The record date for participation at the AGM is seven
days prior to the date of the AGM.



                             Komercni banka in 2004

Komercni banka (KB) is one of the three largest banks on the Czech banking
market. Together with its subsidiaries and Societe Generale (SG) sister
companies it provides a full scope of products and services to both retail and
corporate clients.

As a confirmation of KB prime market position Komercni banka was awarded by the
main prize 'The Bank of the Year 2004' in the Czech Republic in the third year
of the prestigious MasterCard Bank of the Year competition.

In November 2004 KB launched a new communication campaign. The main motto 'My
world. My bank' expresses the aim of KB to help its customers in realizing all
projects both in their personal and professional lives.

Integral to its continuous efforts to enhance the quality of services, Komercni
banka became the first private bank in the Czech Republic to appoint an
independent ombudsman, thus providing its clients the possibility to resolve
potential disputes in an independent way. Prof. Vojtech Cepl was named as KB's
first ombudsman. The Bank has committed itself to respect his decisions, even
though they are not legally binding.

During the year, and as a part of the programme 'Renaissance' launched in the
first half of 2003, the Bank finalised rationalisation of its back-offices;
selected part of support activities was outsourced, domestic payments processing
was centralised into two regional centres and the Bank's operations were further
optimised. As a result the average number of employees declined year on year by
11% to 7,309 employees in December and the Bank realised remarkable cost
savings.

                              Business highlights

Continuous improvements of products, services and relations with customers
resulted in a successful acquiring of new customers. The number of clients
increased year on year by 90,000, i.e. 7% to 1,421,000, mainly due to the
increase in number of private customers. During the year KB opened 5 new
branches and at the end of the year it served its clients in 335 points of sale
throughout the Czech Republic. The Bank also keeps promoting its telephone and
internet banking; over 60% of KB clients connect with the Bank via these direct
channels.

Year-end 2004 brought greater sales of loan products, especially of mortgage
loans. The volume of outstanding mortgages to individuals increased by 40% to
CZK 31.0 billion year on year, and outstanding consumer loans amounted to CZK
10.6 billion, a 17% increase. Again in 2004 there was growth in the number of
active credit cards. By 31 December KB had issued 66,000 active credit cards,
which is a year-on-year increase of 79%. In addition, the offer was extended at
the end of the year with VISA Electron, a new international credit card. This
new card provides simple financing for all clients' needs.

Dynamic growth continued also in financing of small and medium enterprises; the
volume of outstanding loans grew year on year by 25% to CZK 46 billion. As the
market leader in small and medium enterprises financing, KB also launched, in
the very beginning of 2004, a special programme PONTE, an offer of complex
financing services related to the opportunity to receive contributions from the
EU Structural Funds dedicated to medium enterprises and municipalities.

Total loans to large corporations rose by 3% to CZK 67.6 billion years on year.

KB continues in extending and improving its product range. During the last
quarter KB launched MAX II., a new global guaranteed fund following on the
success of MAX I., in which almost CZK 900 million were invested in the latter
half of the year. MAX II. also enables KB clients to benefit from the growth
potential of the world's key securities markets while providing a guarantee of
return on investment. Client interest in the new fund exceeded the Bank's
expectations and during the two-month subscription period almost CZK 500 million
were invested. In October a new co-operation with Allianz Insurance Company was
begun in order to provide the Bank's clients with such non-life insurance
products as car insurance, household and property insurance directly in the
branches. KB also continues in its efforts to satisfy the needs of all client
segments: an innovated package of services for people above 15 and students up
to 30 years of age, GAUDEAMUS, was launched in September and attracted 25,000
new clients. Moreover, more than 55,000 parents opened for their children a
Child account dedicated to KB clients up to 15 years. KB also introduced a new
service of investment banking E-trading providing KB clients with a comfortable
and fast access to the electronic foreign exchange market.

                              Financial highlights

In accordance with International Financial Reporting Standards (IFRS) Komercni
banka reported an unconsolidated and unaudited net profit of CZK 9,302 million
for 2004. KB managed to keep its level of profitability from previous year as
the net result increased slightly by 1.5% on a comparable basis. Very good
business performance in both retail and corporate banking and efficient cost
control led to a like-to-like growth of Net operating income of 9.2%. The
year-on-year development of the Bank's net result was also impacted by lower
release of general provisions in 2004 and more important one-off items in 2003.
Significantly lower one-off gains in 2004 were more than offset by successful
business performance and strict cost control. Main drivers of the 2004 result
and a year-on-year comparison are described below:

                              Net Interest Income

Total level of Net interest income recorded an up-turn and increased to CZK
12,763 million, i.e. by 6.9% compared to 2003. Significant growth in volumes of
client loans, especially retail and SME loans leading to a more favourable
asset' structure, and stable development of customer deposits offset
continuously increasing competition in the market. The level of Net interest
income was slightly positively influenced by growing market interest rates in
2004 (the CNB 2W repo rate increased from 2.00% to 2.25% in June and 2.50% in
August 2004).

                            Net Fees and Commissions

In 2004 Net fees and commissions amounted to CZK 8,886 million, which is a
year-on-year increase of 2.0%. Within this item Non-FX fees and commissions of
CZK 7,125 million represent 80% comprising mainly fee income from payment
transactions, direct banking services, account maintenance, loan administration
and payment card business. This part of fee income grew by 5% year on year
driven by increasing volumes of granted loans, utilisation of payment cards and
direct banking channels. FX fees and commissions represent 20% of the total fee
income and continued in their downward trend from previous period. They declined
by 8.4% to CZK 1,761 million.

                      Net Profit from Financial Operations

Net profit from financial operations comprises result of trading with securities
and FX and derivatives' operations. It amounted to CZK 605 million mainly due to
profit from client FX operations. Starting January 2004 the changes in the fair
values of the available-for-sale (AFS) portfolio have become part of the equity;
however through the end of 2003 CZK 93 million had been included in the profit
and loss statement. On a like-to-like basis Net profit from financial operations
decreased by 14.4%.

                               Net Banking Income

Net banking income on a like-to-like basis increased by 4.4% to CZK 22,717
million.

                                Operating Costs

Operating costs amounted to CZK 11,792 million being stable compared to 2003
(CZK 11,750 million). As the year 2004 was negatively impacted by the increase
in the value-added tax and by doubling the contribution to the Deposit Insurance
Fund, this stable development of costs confirms successful cost management and
increasing efficiency of the Bank.

Personnel expenses decreased by 11.4% to CZK 4,799 million. The Bank finalised
rationalisation of its back-offices: selected part of support activities was
outsourced, domestic payments processing was centralised into two regional
centres and the Bank's operations were further optimised. As a result the
average number of employees declined year on year by 11% to 7,309 employees in
December 2004.

The level of General administrative expenses stood at CZK 5,283 million. The
year-on-year increase of 9.9% was impacted by additional costs of CZK 311
million dedicated to the insurance of deposits. The Bank's expenses were also
negatively influenced by the increase in the value-added tax in January and May
2004. However Komercni banka succeeded in further internal cost savings stemming
mainly from the rationalisation of its operations.

Total charge for Depreciation, impairment and disposal of fixed assets amounted
to CZK 1,709 million, which is a growth of 12.1% compared to 2003.

                              Net Operating Income

Very good business performance in both retail and corporate banking and
efficient cost control led to a like-to-like growth of Net operating income of
9.2% to CZK 10,925 million.

                                  Cost of Risk

Cost of risk includes provisions for loan losses, for impairment of securities
and provisions for other risk expenses. In 2004 it amounted to the net release
of CZK 1,341 million compared to the net release of CZK 2,473 million in 2003.

The Net release of provisions and reserves for loan losses of CZK 1,557 million
was impacted mainly by the the release of general tax-deductible provisions
amounting to CZK 2,375 million in the fourth quarter of the year. In 2003 CZK
2,830 million of general tax-deductible provisions were released.

In context of a growth of the loan portfolio, the level of cost of credit risk
remained unchanged compared to the end of 2003 standing at 37 bp.

Provisions for impairment of securities amounted to a charge of CZK 85 million
connected solely to the CDO portfolio development, compared to a charge of CZK
74 million in 2003. During the year the Bank sold part of this portfolio.
Starting January 2004 the changes in the fair values of the CDO portfolio have
become part of the equity. In the profit and loss statement only impairment on
CDO portfolio is booked.

In the last quarter of 2004 a new line Provisions for other risk expenses was
created, dedicated to legal and operational risks. As at the end of the year CZK
131 million was charged in this line compared to CZK 35 million reported in
Depreciation line until 2003.

                     Profit on subsidiaries and associates

Profit on subsidiaries and associates stood at CZK 889 million driven by the
sale of the Bank's stake in company MUZO in the first half of the year.

                                   Tax Charge

The total income tax amounted to CZK 3,853 million, i.e. a 4.2% decrease
compared to 2003, positively influenced by the decrease in statutory corporate
income tax from 30% to 28%.

                                   Net Profit

Net profit of Komercni banka for the year 2004 amounted to CZK 9,302 million. KB
managed to keep its level of profitability from previous year as the net result
increased slightly by 1.5% on a comparable basis.

                                  Total assets

Total assets of the Bank remained stable on the level of CZK 448,298 million.
Net loans and advances to clients grew significantly by 17.4% to CZK 153,818
million and total Amounts due to customers increased by 3.6% to CZK 361,998
million.

                              Shareholders' equity

KB shareholders' equity increased on a like-to-like basis by 7.9% to CZK 43,707
million. This figure includes net profit of 2004 of CZK 9.3 billion.



In Prague, 28 February 2005.







                        Alexis Juan                                              Philippe Rucheton
                   Komercni banka, a. s.                                       Komercni banka, a. s.
        Chairman of the Board of Directors and CEO                   Member of the Board of Directors and CFO



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