Komerční banka Group Financial Results as of 31 December 2019
Komerční banka reported today its unaudited consolidated results for the year 2019.
Total revenues increased by 1.1% to CZK 32.6 billion. This growth was driven by net interest income, up 3.9% to CZK 23.6 billion on the back of growing volumes of loans and deposits. Net fee and commission income diminished by a slight 0.7% to CZK 6.0 billion due to lower income from transactions, while other fee categories were stable or even improved year over year. Net profit on financial operations decreased by 12.7% to CZK 2.8 billion, as the base from the previous year had been boosted by some extraordinarily large hedging transactions developed for clients.
When excluding the effects of various one-off items in 2018 and 2019, operating expenses were up by 2.7% to CZK 14.9 billion. Adjusted personnel expenses rose by 2.3% to CZK 7.8 billion even as the average number of employees declined by 2.9% to 8,167.
The Bank is reporting overall very low client default rates and very good results from recovery activities, thus resulting in a net release of provisions for the year 2019 of CZK 0.6 billion. Nevertheless, the provisioning trend in the corporate segments began normalising in the second half of the year.
Recurring attributable net profit (i.e. excluding one-off items) reached CZK 14.8 billion, almost the same amount as for 2018. The reported attributable net profit including one-off items was up 0.4%, at CZK 14.9 billion.
Lending to clients increased by 3.1% to CZK 654.0 billion.1 Within this total, financing of housing from KB and Modrá pyramida expanded by 4.0% and consumer lending by KB and ESSOX grew by 1.3%. Lending to businesses and other clients was up by 2.4%.
Deposits from clients climbed by 2.6% year on year to CZK 816.3 billion.2 The volume of KB Group clients’ assets in mutual funds, pension savings, and life insurance rose by 9.7% to CZK 183.8 billion.
The capital adequacy ratio reached a strong 19.7%, and Core Tier 1 capital stood at 19.1%.
„Komerční banka celebrated in January its 30-year anniversary. During those three decades, KB was often the first bank introducing to the Czech market banking innovations that are now considered indispensable. With implementation of the KB Change transformation programme, we have even improved our responsiveness to the changes in client demands, technologies, and the market environment. We are now working hard on a programme for the upcoming years to ensure that KB remains an acknowledged leader in providing quality financial services through safe, simple, and convenient digital channels and via courteous and professional personal contact. This is our way to secure the Bank’s long-term successful development. The year 2019 was one of significant changes in the organisation and culture of KB Group. Even though these changes required significant efforts and attention from the management and all staff, we were able to record growth in revenues and strengthen our relationships with clients. In 2020, the agile working and upgraded distribution platforms will underpin our efforts to reinforce KB’s market position, even in the context created by a somewhat less favourable economic environment.”
1 Excluding volatile reverse repo operations with clients but including debt securities issued by KB’s clients and held by the Bank. Inclusive of repo operations, lending rose by 3.1% year over year to CZK 656.6 billion.
2 Excluding repo operations with clients. The total volume of ‘Amounts due to customers’ moved up by 1.1% to CZK 821.5 billion.