Komercni Banka, A.s. · PSECZ:KOMB
Komercni Banka, A.s — Q2 2022 Earnings Presentation
40 slides from Komercni Banka, A.s's earnings presentation, Aug 3, 2022
Slide 1: KB Group Results as of 30 June 2022
PRAGUE, 3 AUGUST 2022 KB GROUP RESULTS AS OF 30 JUNE 2022 According to IFRS, Consolidated, Unaudited
Slide 2: Disclaimer
DISCLAIMER This document contains a number of forward-looking statements relating to the targets and strategies of the Komerční banka Group. These statements are based on a series of assumptions, both general and specific. As a result, there is a risk that these projections will not be met. Readers
Slide 3: Contents
CONTENTS Highlights as of 30 June 2022 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook update for 2022 Appendix KB GROUP AS OF 30 JUNE 2022│ 3 AUGUST 2022 │ 3
Slide 4: Highlights as of 30 June 2022
HIGHLIGHTS AS OF 30 JUNE 2022 Komerční banka – growing business, strong financial performance, good asset quality Non-bank Loans (gross) * Client deposits * assets under management CZK 769.4 bil./ +8.7% YoY CZK 1,024.3 bil. / +2.7% YoY CZK 205.6 bil. / +4.8% YoY Revenues Operating expenses Cost of R
Slide 5: Contents
CONTENTS Highlights as of 30 June 2022 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook update for 2022 Appendix KB GROUP AS OF 30 JUNE 2022│ 3 AUGUST 2022 │ 5
Slide 6: Resilient performance of the economy
CZECH ECONOMY RESILIENT PERFORMANCE OF THE ECONOMY • GDP in 2Q 2022 +0.2% QoQ and +3.6% YoY, YoY growth was driven by Czech GDP growth (%, YoY) domestic consumption and fixed investments, while net exports contributed 10 3.5 2.5 1.7 4.7 negatively1 5 3.0 • Manufacturing and construction still hinder
Slide 7: Contents
CONTENTS Highlights as of 30 June 2022 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook update for 2022 Appendix KB GROUP AS OF 30 JUNE 2022│ 3 AUGUST 2022 │ 7
Slide 8: Strong business transformation momentum
STRATEGIC INICIATIVES AND AWARDS STRONG BUSINESS TRANSFORMATION MOMENTUM Pursuing important Receiving public Zlatá koruna (Golden initiatives acknowledgements crown) awards Sharing ATMs Green crown – KB loan for This should mark the first VISA Awards 2021 sustainable technologies step in sharing the
Slide 9: Gross lending up 8.7% YoY
LOANS TO CLIENTS GROSS LENDING UP 8.7% YOY Group lending (w/o repo, but incl. client bonds)* CZK billion Group business and other loans CZK billion +8.7% (w/o repo, but incl. client bonds) +2.5% +9.6% YoY +3.6% 724.8 738.9 750.7 769.4 694.7 708.1 YoY 72.5 76.0 78.8 81.5 +18.2% 66.1 69.0 373.8 387.2
Slide 10: Selected deals of the 2Q 2022
SELECTED DEALS SELECTED DEALS OF THE 2Q 2022 WATER DISTRIBUTION UTILITIES PHARMACEUTICALS REAL ESTATE ČESKÁ LÉKÁRNA HOLDING, a.s. FCC Aqualia SA HB Reavis Investments Holding S.A. Baramoore International s.r.o. Syndicated Green Loan Complex Club Financing Club Credit Facility EUR 1,100,000,000 EUR 9
Slide 11: Client deposits up by 2.7% YoY, other AUM +4.8%
DEPOSITS AND OTHER AUM CLIENT DEPOSITS UP BY 2.7% YOY, OTHER AUM +4.8% GROUP DEPOSITS (excluding repo operations)LIENT NON-BANK ASSETS UNDER MANAGEMENTLIENT +2.7% CZK billion +0.9% CZK billion +4.8% YoY YoY 985.7 996.9 1,043.1 1,015.1 1,024.3 203.6 206.9 205.6 948.6 192.2 196.3 199.5 60.5 60.5 60.4
Slide 12: Contents
CONTENTS Highlights as of 30 June 2022 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook update for 2022 Appendix KB GROUP AS OF 30 JUNE 2022│ 3 AUGUST 2022 │ 12
Slide 13: Positive operating jaws, limited increase in risk costs
R E C O N C I L I A T IPORNO O F IFT I & N CLOOM SSE POSITIVE OPERATING JAWS, LIMITED INCREASE IN RISK COSTS Drivers for year on year change in attributable net profit Development of quarterly net profit and its drivers (as of 30 June 2022) +53.6% +62.3% +36.8% 4,201 177 106 92 8,319 3,513 4,806 -15
Slide 14: Balance sheet growth driven by deposits
STATEMENT OF FINANCIAL POSITION BALANCE SHEET GROWTH DRIVEN BY DEPOSITS Assets Liabilities and Equity +12.9% +12.9% CZK billion CZK billion +19.7% +19.7% YoY YoY 1,489 1,489 1,319 1,319 147 +49.2% 1,244 +18.5% 1,244 477 99 83 402 287 +6.9% +9.3% 1,104 1,033 957 725 758 693 9 13 187 191 207 +10.4% 3
Slide 15: Capital above target, MREL issuance launched
CAPITAL, RWA CAPITAL ABOVE TARGET, MREL ISSUANCE LAUNCHED Contributions to capital adequacy ratio in 1H 2022 (%) Contributions to equity in 1H 2022 (CZK million) -97 bps 21.31 20.34 126,782 8,319 -8,272 -1.79 1.72 -1.12 0.92 125,276 -0.48 -1,406 -148 -0.21 31 Dec RWA RWA Interim Provision Inclusion
Slide 16: Interest income growth driven by rates, volumes
NET INTEREST INCOME INTEREST INCOME GROWTH DRIVEN BY RATES, VOLUMES +47.4% Net interest margin (%) QtD NII 6.5% YtD 2.09% 1.93% 2.22% 2.22% 2.17% 2.22% 7,302 1.73% 1.73% 1.60% 1.70% 1.68% 1.70% 6,856 6,448 660 332 494 5,390 5,004 4,953 229 276 291 3,121 3,265 1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022
Slide 17: Growth driven by transactions and cross-sell
NET FEES AND COMMISSIONS GROWTH DRIVEN BY TRANSACTIONS AND CROSS-SELL NFC +4.2% ▪ Transaction fees – All transaction types up compared to 1H21 -1.1% (which had been affected by pandemic restrictions). Main 1,544 1,493 1,477 1,374 1,418 1,376 contribution from continuing fast growth in card payments
Slide 18: Recovery in FX conversions, solid demand for hedging
NET PROFIT FROM FINANCIAL OPERATIONS RECOVERY IN FX CONVERSIONS, SOLID DEMAND FOR HEDGING NPFO -9.4% ▪ Continued strong client hedging activity linked to high volatility -20.1% and expected developments of CZK FX and IR rates 1,081 1,002 953 1,000 864 ▪ Successful tailored hedging strategies for SME
Slide 19: Tight cost control
OPERATING EXPENDITURES TIGHT COST CONTROL Average number of employees (quarterly) +4.7% OPEX 2Q22/2Q21 -23.3% -2.5% 7,820 7,676 7,621 7,635 7,564 7,482 2Q22/1Q22 -1,824 -1,843 -1,933 -1,939 -1,871 -1,916 -1.1% 1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022 2Q 2022 -816 -923 -871 -893 ▪ Personnel costs – 1H
Slide 20: Contents
CONTENTS Highlights as of 30 June 2022 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook update for 2022 Appendix KB GROUP AS OF 30 JUNE 2022│ 3 AUGUST 2022 │ 20
Slide 21: 2Q 2022 asset quality
LOAN PORTFOLIO QUALITY 2Q 2022 ASSET QUALITY Gross lending CZK billion 738.9 750.7 769.4 695.4 708.1 724.8 ▪ Loan portfolio up 8.7% YoY and 2.5% QoQ ▪ Stable credit risk profile of KB loan portfolio 643.2 663.6 663.3 672.4 698.8 630.7 • Stage 2 ratio fluctuating withing the 5%-10% range • NPL ratio
Slide 22: 2Q 2022 cost of risk development
COST OF RISK 2Q 2022 COST OF RISK DEVELOPMENT Total Cost of Risk (Year-to-date, in basis points) 68 ▪ 2Q 2022 CoR net creation at CZK 284 million 42 43 40 33 34 19 24 13 10 15 14 ▪ CZK 502 million created on non-retail portfolios 7 0 7 -17 • Low number of new defaulted clients (Russia or inflation r
Slide 23: Contents
CONTENTS Highlights as of 30 June 2022 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook update for 2022 Appendix KB GROUP AS OF 30 JUNE 2022│ 3 AUGUST 2022 │ 23
Slide 24: Updated outlook for 2022
OUTLOOK FOR 2022 UPDATED OUTLOOK FOR 2022 This is an update of the oultook presented on 5 May 2022. Investors are advised to consider higher than usual level of uncertainty and risks Macroeconomic • Czech GDP expected to grow by 2.5% in FY 2022, with a mild recession (GDP QoQ declining) in 3Q and 4Q
Slide 25: Contents
CONTENTS Highlights as of 30 June 2022 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook update for 2022 Appendix KB GROUP AS OF 30 JUNE 2022│ 3 AUGUST 2022 │ 25
Slide 26: Number of clients and distribution network
KB GROUP CLIENTS AND DISTRIBUTION NETWORK NUMBER OF CLIENTS AND DISTRIBUTION NETWORK 1H 2021 1H 2022 YoY Number of bank clients (thousands, CZ) Number of clients KB Group's clients 2,244,000 2,256,000 12,000 1,664 1,667 1,664 1,641 1,625 1,650 Komerční banka 1,621,000 1,650,000 29,000 – individual c
Slide 27: Continued fast adoption of mobile banking
DIGITAL & INNOVATIONS CONTINUED FAST ADOPTION OF MOBILE BANKING Share of sales by channel* Mobile banking – volume of payments Mobile banking and KB Key penetration (in (selected product categories, %) (CZK billion per month) thousands) 1,099,000; 66.6% 1,200 8% 8% 0% 40 2Q 2022 CZK 103.3 billion (+
Slide 28: Income statement
CONSOLIDATED INCOME STATEMENT INCOME STATEMENT Profit and Loss Statement Reported Change (CZK million, unaudited) 1H 2021 1H 2022 YoY Net interest income 9,956 14,157 42.2% Net fee & commission income 2,792 2,969 6.3% Net profit of financial operations 1,955 1,946 -0.5% Dividend and other income 102
Slide 29: Income statement
CONSOLIDATED INCOME STATEMENT INCOME STATEMENT Profit and Loss Statement Reported Change Change (CZK million, unaudited) 2Q 2021 1Q 2022 2Q 2022 YoY QoQ Net interest income 4,953 6,856 7,302 47.4% 6.5% Net fee & commission income 1,418 1,493 1,477 4.2% -1.1% Net profit of financial operations 953 1,
Slide 30: Balance sheet
CONSOLIDATED STATEMENT OF FINANCIAL POSITION BALANCE SHEET Balance Sheet 30 Jun 31 Dec 30 Jun YoY YoY Ytd Ytd (CZK million, unaudited) 2021 2021 2022 rel. abs. rel. abs. Assets 1,318,604 1,244,353 1,489,019 12.9% 170,415 19.7% 244,666 Cash and current balances with central bank 24,279 29,947 21,383
Slide 31: Capital & profitability indicators
FINANCIAL RATIOS CAPITAL & PROFITABILITY INDICATORS Adjusted for IFRIC 21 Reported linearisation* (year-to-date, IFRS 9) 30/06/2021 31/12/2021 30/06/2022 30/06/2021 30/06/2022 Capital adequacy 23.2% 21.3% 20.3% Tier 1 ratio = Core Tier 1 ratio 22.6% 20.9% 20.0% Risk weighted assets for credit risk (
Slide 32: MREL target and fulfilment status
MREL MREL TARGET AND FULFILMENT STATUS • As of 1 January 2022, KB Group is required to comply with Own funds and eligible liabilities (for MREL) a MREL equal to 14.4% of the consolidated total risk 21.5 Expected MREL as of exposure and 4.46% of the consolidated total exposure. KB 0.4 1.2 1 Jan 2024
Slide 33: 1H 2022 cost of risk structure
APPENDIX - COMPOSITION OF 2Q 2022 COST OF RISK 1H 2022 COST OF RISK STRUCTURE Contribution to Key components H1 2022 CoR Non-retail NPL portfolio 10 bps Non-retail performing portfolio (Stage 1 & 2) 7 bps Retail NPL portfolio -3 bps Retail performing portfolio (Stage 1 & 2) 0 bps TOTAL 14 bps KB GRO
Slide 34: Business performance of subsidiaries 1/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 1/2 1H 2021 1H 2022 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 17,271 10,708 -38% Volume of total loans (gross, CZK million) 69,013 81,547 18% Volume of deposits (CZK million) 60,48
Slide 35: Business performance of subsidiaries 2/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 2/2 1H 2021 1H 2022 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 28,614 39,204 37% Volume of total financing (gross, CZK million) 8,546 10,339 21% Average number of FTEs 41 42 3% Komerční p
Slide 36: Debt securities portfolio in the banking book
SECURITIES DEBT SECURITIES PORTFOLIO IN THE BANKING BOOK CZK billion 154.8 147.6 112.1 123.8 Slovakia 5.1 143.4 11.4 6.3 Poland 0.0 35.5 31.0 Czech sovereign securities 31/12/2021 30/06/2022 Foreign government bonds Debt securities at amortized cost Corporations Debt securities at FV through OCI Not
Slide 37: Macroeconomic environment – Czechia
MACROECONOMIC ENVIRONMENT – CZECHIA Macroeconomic Indicators 2017 2018 2019 2020 2021 2022* 2023* 2024* Real GDP (%, average) 5.3 3.2 3.0 -5.5 3.5 2.5 1.7 4.7 Inflation (%, average) 2.5 2.1 2.8 3.2 3.8 16.8 11.2 2.5 Household consumption (%, average) 4.0 3.3 2.6 -7.4 4.2 -2.2 1.7 5.7 Unemployment (%
Slide 38: Interest rates evolution
INTEREST RATES EVOLUTION For the period 1 Jan 2015 – 29 July 2022 KB GROUP AS OF 30 JUNE 2022│ 3 AUGUST 2022 │ 38
Slide 39: KB #1 listed Czech bank
KB #1 LISTED CZECH BANK Development of KB share price and PX index (1 January 2001 – 29 July 2022) Shareholder structure Free-float 39.6% Société Générale 60.4% • The number of shareholders comprised 64,384 corporate entities and private individuals • Of the Bank’s total share capital of CZK 19,004,
Slide 40: Investor Relations
INVESTOR RELATIONS Komerční banka, a.s. Na Příkopě 33, 114 07 Prague 1 Email: investor_relations@kb.cz Tel.: +420 955 532 156, +420 955 532 155, +420 955 532 734 Internet: www.kb.cz/investors Twitter: @KB_investors Reuters: BKOM.PR Bloomberg: KOMB CP KB GROUP AS OF 30 JUNE 2022│ 3 AUGUST 2022 │ 40