Komerční banka Group Financial Results as of 31 March 2018

Regulatory announcement

Komerční banka reported today its unaudited consolidated results for the first three months of 2018. Deposits from clients grew by 4.3% year on year to CZK 790.7 billion.[1] The volume of KB Group clients’ assets in mutual funds, pension savings and life insurance rose by 5.7% to CZK 163.9 billion. Lending to clients increased by 2.8% to CZK 612.7 billion.[2] Within this total, financing of housing from KB and Modrá pyramida expanded by 6.4% and consumer lending by KB and ESSOX grew by 6.0%.

Total revenues declined by 3.2% to CZK 7.6 billion, mainly due to an elevated base from the previous year’s gains from financial operations that were linked to strong activity among clients during the first half of 2017 in hedging currency risks (relating to the discontinuation of CNB interventions). Net interest income, the main contributing part of revenues, was higher from the year earlier due to growth in the volumes of deposits and loans, as well as increase in market interest rates that positively influenced returns from reinvestment of deposits. Recurring operating expenditures were up by 1.3%[3] at CZK 4.1 billion, driven by personnel expenses and depreciation, while administrative costs were lower year on year. The quality of the loan portfolio remained underpinned by the supportive economic conditions, which led to an extraordinary situation enabling a CZK 0.1 billion net release of provisions for loan losses. Moreover, KB recorded a one-off gain of CZK 0.1 billion related to finalisation of the sale price for KB’s former stake in the company Cataps in connection with the sale of an additional 19% of that company to Worldline S.A. in February 2018.

Recurring attributable net profit (i.e. excluding one-off contributions from sale and revaluation of headquarters buildings in 2017 and the gain related to sale of the additional stake in Cataps during 2018) decreased by 8.4% to CZK 2.9 billion. The reported net profit attributable to shareholders (including the one-off items mentioned above) was lower by 26.5%, at CZK 3.0 billion.

 

[1] Excluding repo operations with clients. The total volume of ‘Amounts due to customers’ moved up by 7.5% to CZK 814.7 billion.

[2] Excluding volatile reverse repo operations with clients but including debt securities issued by KB’s clients and held by the Bank. Including repo, lending rose by 5.4% YoY to CZK 628.3 billion.

[3] Excluding the impact from revaluation of a headquarters building in the first quarter of 2017. If this one-off item is included, reported operating expenditures decreased by 4.5%.