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Komercni Banka (KMCA)

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Thursday 07 May, 2009

Komercni Banka

Comments to results 1Q2009

RNS Number : 8351R
Komercni Banka
07 May 2009
 




Komerční banka Group reports solid profit in first quarter of 2009

Prague, 7 May 2009 - KB Group achieved a net profit of CZK 2,819 million in the first quarter of 2009. Komerční banka increased its net banking revenues year on year and reduced operating costswhereby it mitigated to a large extent rising cost of risdriven by the current tough economic conditions in the Czech Republic.  

The bank continued its lending activities to both business sector and individual clients. The volume of loans provided to clients grew by 15.3% year on year to CZK 378.9 billion and loan-to-deposit ratio reached 67.8% at the end of the quarterPrudent financial management led to achieving capitaadequacy of 12.1as of the end of MarchThe operating cost-income ratio, an indicator of operating efficiencyreached the excellent figure of 40.2%.

The published values are unaudited consolidated results under IFRS (International Financial Reporting Standards). 

BUSINESS PERFORMANCE

KB Group successfully continued to increase its number of clientsThe total number of Group customers neared 2.7 millionof which Komerční banka itself accounted for 1,632,000 clients at the end of Marchan increase of 43,000 as compared with the first quarter of 2008. Of this number, individuacustomers comprised 1,349,000 while the Bank had 283,000 clients among businesses.

Modrá pyramida stavební spořitelna (Modrá pyramida) served 731,000 customersAt 492,000, the number of  supplementary pensioinsurance participants at Penzijní fond KB approached the half-million markThe number of active clients of the consumer financing company ESSOX increased to 244,000 as of the end of March.

An excellent capital and liquidity position enabled Komerční banka to continue in prudent development of its lending activitiesThe total value of granted loans increased by 15.3year-on-year to CZK 378.9 billion,  owhich loans to individuaclients accounted for 43%The volume of mortgages to individuals continued to grow and reached CZK 92.6 billion, an 18.8% increase year on yeareven though sales of new mortgages decreased by approximately 32% due to lower demandModrá pyramida's loan portfolio expanded by 18.2% year on year to CZK 40.5 billionConsumer loans provided by KB and ESSOX grew by 14.7% to CZK 29.3 billion.

The volume of the Group's loans to companies and entrepreneurs expanded by 13.1% to CZK 210.9 billion. Loans provided by KB to small businesses and entrepreneurs rose by 15.3to CZK 23.4 billion, and loans to corporations climbed by 13.2to CZK 184.9 billionAs of the end of March, the volume of receivables financed by Factoring KB had dropped by 9.2% to CZK 2.6 billion.

Deposits remained stable year on year and totalled CZK 538.8 billionThe share of deposits from individuals in the Group's total deposits reached 46%Individual clients' deposits in KB increased by 7.0% to CZK 156.9 billion.  Modrá pyramida customers' savings rose by 1.7% to CZK 64.8 billion, while Penzijní fond clients' assets grew by 11.6% to CZK 26.0 billionIn the first quarter, corporations and entrepreneurs were drawing upon their deposit reserves and their deposits in the Group thus fell by 2.2% to CZK 286.0 billion.

The financial crisis continued to limit clients' interest in mutual fundsSales of IKS/SGAM funds in the KB Group network decreased year on year by 33.8to CZK 2.0 billion, while the volume of assets under management in these funds fell by 14.8to CZK 36.5 billion


The Platinum payment card belongs among the most interesting innovations in the first quarter. This card has been designed for the most demanding clients and brings its holders an exceptional range of advantages, including assistance services and superior travel insurance that also covers against the risk of theft or damage of commonly used business trip items such as notebooks, PDAs, mobile handsets or commercial samples, as well as golf and skiing equipment. Improved features of travel insurance has also been attached to other types of cards since February. The insurance coverage limits have been increasedthe variety of insured risks have been widened and the travel insurance from now on covers family members. The 'Hypotéka bez obav' mortgage  product  allows customers to flexibly increase or decrease the monthly instalment amount or to defer payment for up to three months. It is also possible to arrange insurance against inability to pay.  

KB's distribution network meanwhile continued limited expansion towards the target of 400 branchesAt the end of March, the number of branches thus reached 397. New branches were opened at the start of the year, one in Olomouc and two in BrnoAt the same time, 58.7% of clients were using at least one direct banking channelsuch as internet and telephone bankingThe number of sales representatives serving the customers of Modrá pyramida reached 1,619.

Compared to the first quarter of last year, the number of payment cards used by KB customers increased by 3.5to 1,693,000. Of thesecredit cards accounted for 243,000 (growth by 13.9%)ESSOX  registered  135,000  active credit cardsa 41.7increase year on year.

In February 2009, Komerční banka received the prestigious 'Best Deal of 2008' award from Global Trade Review for an export buyer's credit financing the delivery and installation of health care equipment for a clinic in Almaty, Kazakhstan.

FINANCIAL PERFORMANCE

In a challenging business environment, KB recorded an excellent result for operating revenues and costs as well as solid level of return on equityThe year-on-year development of net profit was affected by growing risk costs, as KB business segment customer portfolio began to feel the impact of the slowing-down Czech economy. 

Net interest income, the most significant revenue item, rose by 6.8to CZK 5,420 million, benefiting primarily from loan growth. The market pressure on margins shifted from loans to depositsTotal net fees and commissions dropped by 3.0% to CZK 1,896 million, despite the increase in the number of clients. The drop was driven by limited customer activities while pricing remained flat, and one-off income in 2008Net profit on financial operations climbed by 47.4to CZK 1,129 million, driven by successful trading on the Bank's own account and strong demand from clients for such financial market products as hedging of currency and interest rate risks

KB Group reduced its total operating costs by 4.3year-on-year to CZK 3,413 million, thereby improving the cost-income ratio to 40.2from 45.5in the previous yearAmong these costs, personnel expenses  rose  7.4% to CZK 1,606 million in connection with growth in the average number of employees by 2.9 to 8,930General administrative expenses recorded a sharp year-on-year drop by 9.0% to CZK 1,459 million.  Depreciationimpairments and disposals of fixed assets fell by 26.0to CZK 348 million. The year-to-year comparison was influenced by one-off creation of a provision for the impairment of a building in the first quarter of last year. 

The modest growth in total revenues and prudent control of operating expenses led to an increase of gross operating income by 18.7% to CZK 5,077 million. 

The development of the cost of risin the first quarter of 2009 was determined by the sharp deterioration of the economic environment in the Czech RepublicThe cost of risk totalled CZK 1,580 million, which represents an increase of 244.2compared to the same period of the previous yearThe growth especially related to corporate clientsbut the expected worsening of the risk profile was observed to some extent in the retail banking segment as wellOverall, the consolidated cost of credit risk increased from 89 basis points for Q4 2008 to 108 basis points for the first quarter of 2009.



Income tax dropped by 10.7to CZK 624 million due to lower net profit generation and the reduction in the corporate income tax rate

KB Group's net profit for the first three months of 2009 reached CZK 2,819 million, which i7.5less than in the same period of 2008. 

The Group's total assets as of 31 March 2009 amounted to CZK 685.6 billionwhich represents an increase of 1.0compared to the end of March 2008 but a 1.9% decline compared to the end of the year 2008. The consolidated shareholders' equity rose by 14.9year on year, but decreased by 0.9from the start of the year, to reach CZK 62.4 billion

KB Group's capitaadequacy under Basel II standards was 12.1%, while the Tier 1 core capital ratio came to 10.7%.



Monika Klucová

Spokesperson









ANNEX: Consolidated results as at 31 March 2009, under International Financial Reporting Standards (IFRS)

(CZK million)

31 March 2009

not audited

31 March 2008

audited

Year-on-year change

Net banking income

8,489

7,845

8.2%

Operating costs

3,413

3,568

-4.3%

Gross operating income

5,077

4,276

18.7%

Cost of risk

1,580

459

244.2%

Income taxes

624

699

-10.7%

Net profit

2,819

3,048

-7.5%

Total assets 

685,554

679,101

1.0%

Loans and advances to customers, net

365,449

318,882

14.6%

Amounts due to customers

538,831

539,533

-0.1%

Total shareholders' equity

62,416

54,345

14.9%


31 March 2009

31 March 2008

Year-on-year change

ROAE 

18.0%

23.2%

Capital adequacy (CNB)

12.1%

11.6%

Tier 1 ratio (CNB)

10.7%

10.7%

Risk-weighted assets for credit risk (CZK billion)

289.2

265.6

8.9%

Cost-to-income ratio

40.2%

45.5%

Net interest margin

3.4%

3.3%

Earnings per share (CZK, annualised)

297

321

-7.5%

Average number of employees 

8,930

8,679

2.9%

Number of branches (KB standalone)

397

389

+8

Number of ATMs

679

663

+16

Number of clients (KB standalone)

1,632,000

1,590,000

2.7%


Business performance in the retail segment - overview

31 March 2009

Year-on-year change 

Mortgages to individuals - volume of outstanding loans

CZK 92.6 billion 

19%

  - number of outstanding loans

78,000

13%

Consumer loans (KB + ESSOX) - volume of outstanding loans

CZK 29.3 billion 

15%

Small business loans - volume of outstanding loans

CZK 23.4 billion

15%

Total active credit cards - number

243,000

14%

  - of which to individuals

183,000

15%

Total active debit cards - number

1,450,000

2%

Gaudeamus - number of youth and student packages

169,000

9%

  - volume of Gaudeamus loans

CZK 522 billion 

-4%

Children's accounts - total number

173,000

4%



This information is provided by RNS
The company news service from the London Stock Exchange
 
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