Komerční banka Group Financial Results as of 31 March 2020
Prague, 6 May 2020 – Komerční banka reported today its unaudited consolidated results for the first quarter of 2020.
Total revenues decreased by (1.4%) to CZK 7.8 billion. Net interest income was down by (0.8%), at CZK 5.8 billion, despite increase in the volume of loans and deposits, due to lower spreads on retail lending and reinvestment yields from deposits. Net fee and commission income diminished by (5.3%) to CZK 1.4 billion due to lower income from transactions. That reflected impacts from new regulation of fees for cross-border payments and decreased transaction activity in March, even as other fee categories were stable or even improved year over year. Net profit on financial operations increased by 3.2% to CZK 0.6 billion, boosted by higher demand from clients for hedging of financial risks in the volatile environment.
Operating expenses were up by 5.2%, at CZK 4.4 billion. This growth was driven mainly by increased contribution to the Resolution and Deposit insurance funds and by emergency purchases. The average number of employees increased by 0.1% to 8,173.
The net creation of provisions for the first quarter of 2020 totalled CZK 0.2 billion. Nevertheless, the provisioning has not yet fully absorbed the full impact of economic hardship ensuing from the coronavirus pandemic.
The reported attributable net profit was down (16.3%), at CZK 2.7 billion.
Lending to clients increased by 4.9% to CZK 668.2 billion.1) Within this total, financing of housing from KB and Modrá pyramida expanded by 4.9% and consumer lending by KB and ESSOX grew by 1.2%. Lending to businesses and other clients was up by 5.2%, influenced also by increase in the Czech crown value of loans provided in euro.
Deposits from clients climbed by 8.3% year on year to CZK 894.9 billion.2) The volume of KB Group clients’ assets in mutual funds, pension savings, and life insurance rose by 4.0% to CZK 179.8 billion.
The capital adequacy ratio reached a strong 20.8%, and Core Tier 1 capital stood at 20.2%. The liquidity coverage ratio was at 241%, significantly above the regulatory minimum of 100%.
„Komerční banka has been able to switch expeditiously into a protected mode whereby all services are available to clients, the core branch network is operating, and the vast majority of people are working from home. This attests to the professionalism, commitment, and, indeed, the agile approach of people within Komerční banka group. We have put this resilience and relentlessness to work by helping the customers to overcome the tough challenges posed in recent weeks. As in previous and any future crises, Komerční banka stands ready and stands by its clients. There will be lessons learned from the Covid-19 outbreak and its consequences. The transformational steps we have taken in the past two years have been completely validated. We are going to further accelerate our mission to build a future-proof financial services group that delivers value to clients, shareholders, employees, and the whole of society in a safe and effective way.”
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 4.8% year over year to CZK 671.1 billion.
2) Excluding repo operations with clients. The total volume of ‘Amounts due to customers’ moved up by 7.8% to CZK 923.7 billion.