In the first quarter, Komerční banka (KB) net profit fell by 24.9 percent year on year to two billion crowns. Net operating income was 5.3 percent lower in the first three months, reaching CZK 7.4 billion. Operating costs fell by 1.5 percent to CZK 4.3 billion. The bank, which is majority owned by the French Société Générale, published its unaudited consolidated results on its website today.
“Despite the apparent effects of the pandemic environment, Komerční banka’s overall results for the first quarter are satisfactory and some areas, such as housing loans or debt services to clients in the capital markets, exceeded expectations,” said Jan Juchelka, Chairman of the Board and CEO.
Loans to clients increased by four percent year-on-year to CZK 694.7 billion. Housing loans provided by Komerční banka and its building society Modrá pyramida rose by 8.7 percent. Of this, the volume of KB mortgages increased by 7.2 percent to CZK 248.7 billion, and Modrá pyramida showed a growth in its portfolio by 14.9 percent to CZK 66.1 billion. In contrast, the volume of consumer loans fell by 1.8 percent to CZK 38.4 billion. The volume of loans to enterprises and other entities increased by 0.6 percent year on year to CZK 341.5 billion.
Client deposits rose by 10.1 percent to 985.7 billion crowns. Citizens’ deposits in KB increased by 15.7 percent year-on-year to CZK 339.4 billion. Deposits in the Blue Pyramid decreased by half a percent to 60.5 billion crowns. Deposits from corporate and business clients increased by 7.5 percent to CZK 568.3 billion.
According to the bank, the decline in operating income was due to lower interest income, due to a significant year-on-year decline in market interest rates due to the economic effects of the pandemic crisis, including a reduction in the CNB’s key monetary policy rate from 2.25 percent to 0.25 percent between March and May 2020. Net interest income decreased by 14.4 percent to five billion crowns, net fees and commissions increased by 1.6 percent to almost 1.4 billion crowns and the net result from financial operations in the amount of one billion crowns was higher by 70.1 percent as market volatility and debt issuance raised clients’ demand for financial risk hedging, the bank said.
Operating expenses decreased despite the fact that the cost of contributions to the Resolution Fund and the Deposit Insurance Fund increased by 7.1 percent. Personnel costs were six percent lower, reaching 1.8 billion crowns, when the average number of employees fell by 4.3 percent to 7,820.
The consolidated regulatory capital for the calculation of capital adequacy at the end of March reached CZK 100.5 billion. Capital adequacy was 22.5 percent. The loan-to-deposit ratio was 68.9 percent.
The Annual General Meeting of KB, which took place in April, in accordance with the instructions of the Czech National Bank, again agreed to the transfer of the entire profit of 2020 to the account of retained earnings of previous years. The Board of Directors is ready to convene an Extraordinary General Meeting in the fourth quarter of this year, which will decide on the distribution of dividends in the amount approved by the regulator.
The Bank is the parent company of the KB Group and part of the international Société Générale group. It is one of the leading banking institutions in the Czech Republic and in the region of Central and Eastern Europe. KB’s main shareholder is the French Société Générale with a share of 60.35 percent.
Source: CTK and KB
