Slide 1: KB Group Results as of 31 Dec 2020
PRAGUE, 10 FEBRUARY 2021 KB GROUP RESULTS AS OF 31 DEC 2020 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 of 2020 Macroeconomic environment Strategy implementation Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2021 Appendix KB GROUP AS OF 31 DECEMBER 2020│ 10 FEBRUARY 2020 │ 3
Slide 4: Highlights as of 31 December 2020
HIGHLIGHTS AS OF 31 DECEMBER 2021 Excess capital locked Total capital adequacy at 22.3%, excluding net profit of 2020, above the regulatory minimum of 16.2%. by dividend restrictions KB expects discussion with the CNB on the dividend proposal to begin in March, upon audited financial statements.
Slide 5: Contents
CONTENTS Highlights of 2020 Macroeconomic environment Strategy implementation Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2021 Appendix KB GROUP AS OF 31 DECEMBER 2020│ 10 FEBRUARY 2020 │ 5
Slide 6: Czech economy proved high level of flexibility and adaptability
CZECH ECONOMY PROVED HIGH LEVEL CZECH ECONOMY OF FLEXIBILITY AND ADAPTABILITY • GDP in 4Q 2020 –5.0% YoY, +0.3% QoQ as per flash estimate. GDP in 2020 Czech GDP growth (%, yoy)3 estimated to drop by 6% due mainly fixed investments and household consumption. • Czech car production in 2020 lost 19.2%
Slide 7: COVID-19 impact and mitigating measures
COVID-19 IMPACT AND MITIGATING MEASURES The hospitality, retail, culture & sports sectors remain under lockdown, but industry fully operational Pandemic situation: Strong 2nd and 3rd waves. Emergency state Czech Daily Infection Rates from 5th October 2020, prolonged so far until 14th February 2021
Slide 8: Contents
CONTENTS Highlights of 2020 Macroeconomic environment Strategy implementation Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2021 Appendix KB GROUP AS OF 31 DECEMBER 2020│ 10 FEBRUARY 2020 │ 8
Slide 9: KB Change 2025 strategic framework
KB CHANGE 2025 STRATEGIC FRAMEWORK Purpose Building together, with our clients, a better and sustainable future through responsible and innovative financial solutions. Vision and ambition for 2025 Be a leader in new era of banking for 2 million active clients Strategic pillars Growth Helpfulness Res
Slide 10: Strategic steps ahead
SELECTED ACHIEVEMENTS STRATEGIC STEPS AHEAD CORE FOR THE NEW DIGITAL BANK KB’s EUR COVERED BOND PROGRAM KB has selected Temenos Transact core banking KB diversified its EUR funding sources, established yield curve platform in order to decrease time to market for and improved borrowing costs with its
Slide 11: Enriching digital ecosystem
RETAIL DIGITAL BANKING ENRICHING DIGITAL ECOSYSTEM CONSUMER LENDING AS FLAGSHIP OF NEW SERVICES INTRODUCED IN 4Q20 CONTINUING SWITCH TO DIGITAL DIGITAL SALES BankID service – pilot operations started Steady growth in mobile banking Share of sales by channel* penetration (selected product categories,
Slide 12: Digitalisation & sustainability in corporate banking
CORPORATE BANKING DIGITALISATION & SUSTAINABILITY IN CORPORATE BANKING SUSTAINABLE NEW SERVICES CO-OPERATION WITH FINTECH CORPORATE BANKING MůjPodpis - signing and Acquired participation interest authentication via bank Upvest - online real estate crowdfunding Dedicated funds for advantageous financ
Slide 13: Selected deals of the second half of 2020
SELECTED DEALS SELECTED DEALS OF THE SECOND HALF OF 2020 PHOTOVOLTAIC POWER PLANT REAL ESTATE MACHINERY TECHNOLOGY FVE CZECH NOVUM s.r.o. CTP Industrial Property CZ, spol. s r.o. TEDOM a.s. Kiwi.com s.r.o. Financing Real Estate Financing Club Financing COVID Plus - Syndicated Financing CZK 1,100,000
Slide 14: Contents
CONTENTS Highlights of 2020 Macroeconomic environment Strategy implementation Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2021 Appendix KB GROUP AS OF 31 DECEMBER 2020│ 10 FEBRUARY 2020 │ 14
Slide 15: Gross lending excluding repo up 5.7% YoY
LOANS TO CLIENTS GROSS LENDING EXCLUDING REPO UP 5.7% YOY Group lending (w/o repo, but incl. client bonds) CZK billion Group business and other loans CZK billion +5.7% (w/o repo, but incl. client bonds) -0.1% +4.3% YoY -1.7% 654.0 654.0 668.2 676.3 692.3 691.4 54.9 56.2 57.6 59.4 61.7 63.9 +13.7% Yo
Slide 16: Client deposits rose by 9.4% YoY
DEPOSITS AND OTHER AUM CLIENT DEPOSITS ROSE BY 9.4% YOY Group deposits (w/o repo operations) CZK billion Deposit product structure CZK billion +9.4% (w/o repo operations) -4.0% YoY YoY 860.2 894.9 898.3 930.4 893.0 930.4 816.3 860.2 894.9 898.4 893.0 816.3 60.8 60.3 60.0 60.8 -1.7% 61.2 61.8 571.3 6
Slide 17: Contents
CONTENTS Highlights of 2020 Macroeconomic environment Strategy implementation Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2021 Appendix KB GROUP AS OF 31 DECEMBER 2020│ 10 FEBRUARY 2020 │ 17
Slide 18: Resilient result despite deep economic downturn
R E C O N C I L I A T IPORNO O F IFT I & N CLOOM SSE RESILIENT RESULT DESPITE DEEP ECONOMIC DOWNTURN Drivers for year on year change in attributable net income (as of 31 December 2020) -45.3% 45.1% 14,901 14,846 -55 95 24 -2,231 -773 -87 1,434 8,156 -5,150 -2 Reported One- Recurring NII NFC NPFO & R
Slide 19: Growing deposits and equity reinvested in loans and securities
GROWING DEPOSITS AND EQUITY STATEMENT OF FINANCIAL POSITION REINVESTED IN LOANS AND SECURITIES Assets Liabilities and Equity CZK billion 8.3% CZK billion 8.3% YoY YoY 1,167 1,077 1,167 1,077 87 286 -7.5% 262 9.1% 94 +10.3% 906 680 +5.1% 822 647 159 +21.1% 3 47 4 3 53 1 131 117 37 42 109 +7.8% 31 Dec
Slide 20: NII affected by fall in interest rates
NET INTEREST AND SIMILAR INCOME NII AFFECTED BY FALL IN INTEREST RATES Net interest margin (%) QtD NII -11.1% YtD +0.2% 5,911 5,921 5,845 2.08% 2.19% 2.19% 2.35% 2.17% 2.17% 356 357 1.73% 2.00% 1.80% 1.96% 1.85% 2.03% 343 4,999 5,254 5,262 315 365 339 2,926 2,882 2,870 2,285 2,474 2,476 3Q 2019 4Q 2
Slide 21: Fee income hit by drop in activity and regulation of SEPA payments
FEE INCOME HIT BY DROP IN ACTIVITY NET FEES AND COMMISSIONS AND REGULATION OF SEPA PAYMENTS ▪ Transaction fees – number of cash and at-branch transactions NFC down significantly, slight increase in number of non-cash and card -12.5% transactions. Rebasement in 2020 due to new regulation of fees +9.3
Slide 22: Effects of higher volatility gradually offset by lower activity
EFFECTS OF HIGHER VOLATILITY NET PROFIT FROM FINANCIAL OPERATIONS GRADUALLY OFFSET BY LOWER ACTIVITY IN THE ECONOMY NPFO ▪ Gradually moderating clients’ hedging activity of financial 6.1% risks reflecting somewhat lower volatility, decrease in 919 -6.3% underlying activity (such as investment lendin
Slide 23: Operating costs flat including transformation
OPERATING EXPENDITURES OPERATING COSTS FLAT INCLUDING TRANSFORMATION Average number of employees (quarterly) -3.9% OPEX 2020/2019 +2.3% -1.3% 8 8,170 8,204 8,173 8,128 7,997 7,949 4Q20/4Q19 -1,978 -1,959 -1,940 -1,947 -1,927 -1,836 -3.1% 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 -910 -1,094 -8
Slide 24: Contents
CONTENTS Highlights of 2020 Macroeconomic environment Strategy implementation Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2021 Appendix KB GROUP AS OF 31 DECEMBER 2020│ 10 FEBRUARY 2020 │ 24
Slide 25: 4Q 2020 asset quality
LOAN PORTFOLIO QUALITY 4Q 2020 ASSET QUALITY Gross lending CZK billion ▪ Loan exposure up by 5.3 % YoY, down by 0.6% QoQ 657.1 656.6 671.1 680.4 695.3 691.4 ▪ Stable share of stage 2 exposure at 6.4% 629.4 609.5 609.0 620.2 628.4 628.8 • Limited migration intensity into default 32.7 33.7 44.5 • Cont
Slide 26: Zoom on terminated loan moratorium portfolios
LOAN PORTFOLIO QUALITY ZOOM ON TERMINATED LOAN MORATORIUM PORTFOLIOS Terminated loan o.w. defaulted % of defaulted o.w. non-defaulted % of non-defaulted CZK billion moratorium portfolio exposure exposure exposure with DPD >10 exposure with DPD >10 Corporates 29.1 2.1 7.2% 0.2 0.6% Mortgages 31.5 1.3
Slide 27: FY 2020 cost of risk structure
COST OF RISK FY 2020 COST OF RISK STRUCTURE Key components Detailed view Contribution to FY CoR 2020 defaults 29 bps Corporate NPL portfolio Reprovisioning of pre-covid defaults -3 bps 2020 moratorium defaults 5 bps Retail NPL portfolio 2020 non-moratorium defaults 8 bps Reprovisioning of pre-covid
Slide 28: Zoom on 4Q 2020 cost of risk
COST OF RISK ZOOM ON 4Q 2020 COST OF RISK Total Cost of Risk (Year-to-date, in basis points) 91 99 71 68 68 ▪ 4Q 2020 CoR net creation at CZK 1.2 billion 52 50 43 10 38 ▪ 3 main risk components -2 -7 -4 9 -12 -9 9 • CoR net creation at CZK 1.1 billion on corporate -15 3Q 2019 4Q 2019 1Q 2020 2Q 2020
Slide 29: Contents
CONTENTS Highlights of 2020 Macroeconomic environment Strategy implementation Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2021 Appendix KB GROUP AS OF 31 DECEMBER 2020│ 10 FEBRUARY 2020 │ 29
Slide 30: Further increase in capital strength
CAPITAL, RWA FURTHER INCREASE IN CAPITAL STRENGTH Contributions to capital adequacy ratio in 2020 (%) Contributions to equity in 2020 (CZK million) +262 bps 120 147 117,058 3.39 22.34 0.00 -0.27 8,156 19.72 108,635 -0.36 -0.14 31 Dec RWA RWA Other Retained Interim OCI & 31 Dec 1 Jan 2020 YtD profit
Slide 31: Surplus capital temporarily locked by regulatory dividend restrictions
SURPLUS CAPITAL TEMPORARILY LOCKED BY DIVIDENDS REGULATORY DIVIDEND RESTRICTIONS ▪ KB’s total capital adequacy at 22.3%, not including profit generated in 2020, is Dividend history (Dividend per share, in CZK) significantly above the applicable regulatory minimum of 16.2%, and even over the target r
Slide 32: Baseline outlook for 2021 (as of January)
OUTLOOK FOR 2021 BASELINE OUTLOOK FOR 2021 (AS OF JANUARY) Investors are advised to consider higher than usual level of uncertainty and risks Macroeconomic • Czech economy expected to grow slightly after a sharp drop in 2020, supported by proactive economic assumptions policy. Growth should be drive
Slide 33: Contents
CONTENTS Highlights of 2020 Macroeconomic environment Strategy implementation Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2021 Appendix KB GROUP AS OF 31 DECEMBER 2020│ 10 FEBRUARY 2020 │ 33
Slide 34: Number of clients and distribution network
KB GROUP CLIENTS AND DISTRIBUTION NETWORK NUMBER OF CLIENTS AND DISTRIBUTION NETWORK 2019 2020 YoY Number of bank clients (thousands, CZ) Number of clients 1,664 1,667 1,664 * 2,293,000 * -68,000 ** 1,654 KB Group's clients 2,361,000 1,647 1,641 Komerční banka 1,664,000 1,641,000 -23,000 – individua
Slide 35: Income statement
CONSOLIDATED INCOME STATEMENT INCOME STATEMENT Profit and Loss Statement Reported Recurring* FY 2019 FY 2020 Change FY 2019 FY 2020 Change Items excluded in “recurring”: (CZK million, unaudited) YoY YoY Net interest income 23,591 21,360 -9.5% 23,591 21,360 -9.5% FY 2019 Net fee & commission income 5
Slide 36: Quarterly income statement
CONSOLIDATED INCOME STATEMENT – QUARTERLY VIEW QUARTERLY INCOME STATEMENT Profit and Loss Statement Reported Change Change (CZK million, unaudited) 4Q 2019 3Q 2020 4Q 2020 YoY QoQ Net interest income 5,921 5,254 5,262 -11.1% 0.2% Net fee & commission income 1,542 1,235 1,350 -12.5% 9.3% Net profit o
Slide 37: Balance sheet
CONSOLIDATED STATEMENT OF FINANCIAL POSITION BALANCE SHEET Balance Sheet YoY YoY (CZK million, unaudited) 31 Dec 2019 31 Dec 2020 rel. abs. Assets 1,077,334 1,167,131 8.3% 89,797 Cash and current balances with central bank 17,744 23,547 32.7% 5,803 Loans and advances to banks 244,561 262,606 7.4% 18
Slide 38: Capital & profitability indicators
FINANCIAL RATIOS CAPITAL & PROFITABILITY INDICATORS Reported (year-to-date, IFRS 9) 31/12/2019 31/12/2020 Capital adequacy 19.7% 22.3% Tier 1 ratio = Core Tier 1 ratio 19.1% 21.7% Risk weighted assets for credit risk (CZK billion) 367.6 375.9 Net interest margin, annualised 2.4% 2.0% Loan (net) / de
Slide 39: Zoom on stage 2 exposure evolution
APPENDIX ZOOM ON STAGE 2 EXPOSURE EVOLUTION ▪ 4Q 2020 stage 2 share lower at 6.4% • QoQ decrease by CZK 5.6 Bn • Contained intensity (CZK 2.6 Bn) of migrations into default for both corporate and retail segments • Residual net migrations between stage 1 and stage 2 exposure categories, for both corp
Slide 40: Lending with state Covid guarantee
LENDING WITH GUARANTEES LENDING WITH STATE COVID GUARANTEE Outstanding Signed exposure* GUARANTEED COVID LENDING No. of clients (CZK million) (CZK million) Covid II 895 3,918 3,698 Covid Prague 52 337 301 Covid III 1,726 11,851 11,247 Covid Plus 7 1,587 847 Total 2,680 17,693 16,093 * according to Č
Slide 41: Business performance of subsidiaries 1/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 1/2 FY 2019 FY 2020 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 10,110 18,767 86% Volume of total loans (gross, CZK million) 56,247 63,938 14% Volume of deposits (CZK million) 61,817
Slide 42: Business performance of subsidiaries 2/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 2/2 FY 2019 FY 2020 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 54,020 49,849 -8% Volume of total financing (gross, CZK million) 9,360 8,309 -11% Average number of FTEs 44 42 -4% Komerční
Slide 43: Debt securities portfolio in the banking book
SECURITIES DEBT SECURITIES PORTFOLIO IN THE BANKING BOOK CZK billion 128.8 103.7 88.6 68.0 Slovakia 6.2 114.5 13.7 7.5 Poland 0.1 0.5 35.7 40.2 31/12/2019 31/12/2020 Debt securities at amortized cost Czech government bonds Debt securities at FV through OCI Foreign government bonds Bonds of fin.insti
Slide 44: Macroeconomic environment – Czechia
MACROECONOMIC ENVIRONMENT – CZECHIA Macroeconomic Indicators 2016 2017 2018 2019 2020 2021* 2022* Real GDP (%, average)* 2.5 5.4 3.2 2.2 -6.0 2.6 3.9 Inflation (%, average) 0.7 2.5 2.1 2.8 3.2 1.8 1.9 Household consumption (%, average)* 3.7 4.0 3.3 2.9 -4.8 2.8 3.5 Unemployment (%, av., ILO meth.)*
Slide 45: Interest rates evolution
INTEREST RATES EVOLUTION For the period 1 Jan 2006 – 31 January 2021 KB GROUP AS OF 31 DECEMBER 2020│ 10 FEBRUARY 2020 │ 45
Slide 46: KB #1 listed Czech bank
KB #1 LISTED CZECH BANK Development of KB share price and PX index (1 January 2001 – 31 January 2021) Shareholder structure Free-float 39.6% Société Générale 60.4% • The number of shareholders comprised 57,001 corporate entities and private individuals. • Of the Bank’s total share capital of CZK 19,
Slide 47: 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 31 DECEMBER 2020│ 10 FEBRUARY 2020