Group Financial Results as
of 30 September 2018

Regulatory announcement

Komerční banka reports improvement in revenues, growth in number of clients, volumes of loans and deposits

  • The total number of the Bank’s customers rose by 12,000 year on year to 1,669,000. KB Group was attending to a total of 2,391,000 clients.
  • The growth in the number of clients with KB Mobilní banka even accelerated. As of 30 September 2018, 570,000 of the Bank’s clients had Komerční banka’s mobile banking application, up by 169,000 year on year.
  • The total volume of KB Group’s lending expanded by 3.8% year on year. Housing loans were higher by 5.4%, with faster growth occurring mainly at Modrá pyramida. Consumer loans grew also by 5.4%. Lending to businesses rose by 3.2%.
  • The overall volume of standard client deposits within KB Group expanded by 4.1%. Bank deposits from individuals grew by a swift 9.8%. Volume of assets under management in mutual funds, pension assets, and life insurance was up by 4.9%.
  • KB reported a 2.6% increase in revenues. Net interest income was up 5.8% thanks to income volume growth from both deposits and loans, as well as due to rising yields from reinvestment of deposits. Fee income declined by a slight 1.1%, reflecting intense competition on the market. Still achieving an excellent result, net profit from financial operations was down by 10.8% because last year’s first half had seen exceptionally strong currency hedging activity among clients in relation to the discontinuation of CNB interventions.  
  • Recurring operating costs increased by 1.8%, thus by less than the rate of inflation. Reported operating costs inclusive of exceptional items in both 2017 and 2018 were almost flat (+0.4%).
  • Successful recovery performance in both corporate and retail segments and in combination with clients’ good repayment discipline in the favourable phase of the business cycle allowed KB to record a CZK 0.7 billion net release of loan loss provisions.
  • Recurring net profit improved by 6.1% year on year to reach CZK 11.0 billion. Reported net income, including such various one-off items as creation of the restructuring reserve in 2018 and sale of a head office building in 2017, was down 2.4%.
  • The Bank is taking further steps in its strategic transformation as formulated in the KB Change programme. It has launched several of the first cross-functional agile teams dedicated to specified client needs. The number of management layers is being reduced across the Bank. Improved efficiency of processes will lead to a reduction in the overall number of employees by 5% through the end of 2019’s first half, compared to the end of 2017.

“The main contribution to the solid revenues in the first nine months came from interest income and financial operations. On top of that, we have recorded an excellent result in terms of cost of risk and kept operating expenditures under control. I am happy to see the number of our clients increasing, and the growth in users of our mobile banking is indeed impressive. At the same time, the indicators of our clients’ satisfaction show improvement and we are all very committed to further enhancing their customer experience in the months to come,” remarked Jan Juchelka, KB’s Chairman of the Board of Directors and Chief Executive Officer.

“The fundamental changes we are currently implementing and investments we are making in growth opportunities will help us to reinforce our market position going forward and, more broadly, to fulfil our vision of delivering long-term value to our clients, employees and shareholders while acting responsibility towards society,” he added.