Komercni Banka, A.s. · PSECZ:KOMB
Komercni Banka, A.s — FY2022 Earnings Presentation
43 slides from Komercni Banka, A.s's earnings presentation, Feb 8, 2023
Slide 1: KB Group Results for Full Year & 4Q 2022
PRAGUE, 8 FEBRUARY 2023 KB GROUP RESULTS FOR FULL YEAR & 4Q 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 31 December Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital & dividends Outlook for 2023 Appendix KB GROUP AS OF 31 DECEMBER 2022│ 8 FEBRUARY 2023 │ 3
Slide 4: Highlights as of December 2022
HIGHLIGHTS AS OF 31 DECEMBER 2022 Recovery in revenues, excellent cost discipline, resilient asset quality Loans (gross) Client deposits * Non-bank assets under management CZK 784.9 billion CZK 916.8 billion CZK 216.6 billion Influenced by +6.2% YoY / -0.3% QoQ -3.4% YoY / -9.2% QoQ seasonality +6.4
Slide 5: Contents
CONTENTS Highlights as of 31 December Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital & dividends Outlook for 2023 Appendix KB GROUP AS OF 31 DECEMBER 2022│ 8 FEBRUARY 2023 │ 5
Slide 6: Economy to recover gradually from shallow recession
ECONOMY TO RECOVER GRADUALLY CZECH ECONOMY FROM SHALLOW RECESSION Czech GDP growth (% YoY) • GDP in 4Q 2022 -0.3% QoQ and +0.4% YoY, YoY growth was driven by fixed 10 3.6 investments and foreign demand, while consumption contributed 5 3.0 2.5 2.4 negatively. GDP in full year 2022 was up 2.5%1 0.3 0
Slide 7: Contents
CONTENTS Highlights as of 31 December Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital & dividends Outlook for 2023 Appendix KB GROUP AS OF 31 DECEMBER 2022│ 8 FEBRUARY 2023 │ 7
Slide 8: Gross lending up 6.2% YoY
LOANS TO CLIENTS GROSS LENDING UP 6.2% YOY Group lending (w/o repo, but incl. client bonds)* CZK billion Group business and other loans CZK billion +6.2% (w/o repo, but incl. client bonds) -0.3% +8.0% YoY 769.4 787.2 784.9 -1.4% 724.8 738.9 750.7 81.5 83.8 85.3 +12.1% YoY 72.5 76.0 78.8 401.6 366.9
Slide 9: Selected deals of the 2H 2022
SELECTED DEALS SELECTED DEALS OF THE 2H 2022 SALE OF METALS & METAL ORES HEALTH CARE AND SOCIAL SERVICES TRADING - AGRICULTURE PRODUCTS REAL ESTATE PRODUCTION OF ELECTRICITY HEALTH CARE Future Life a.s. and CTPark Ostrava, spol. s r.o. Ferona, a.s. TOP HOP spol. s r.o. FVE CZECH NOVUM s.r.o. Penta H
Slide 10: AUM up by 6.4%, deposits down 3.4% YoY
AUM UP BY +6.4%, DEPOSITS DOWN 3.4% YOY, DEPOSITS AND OTHER AUM STRONGER SEASONAL OPTIMISATION IN Q4 GROUP DEPOSITS (excluding repo operations)LIENT NON-BANK ASSETS UNDER MANAGEMENTLIENT -3.4% CZK billion -9.2% CZK billion +6.4% YoY YoY 1,043.1 1,015.1 1,024.3 1,010.1 216.6 948.6 916.8 199.5 203.6 2
Slide 11: Contents
CONTENTS Highlights as of 31 December Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital & dividends Outlook for 2023 Appendix KB GROUP AS OF 31 DECEMBER 2022│ 8 FEBRUARY 2023 │ 11
Slide 12: Record net profit on dynamic revenues, operating and risk costs under control
RECORD NET PROFIT ON DYNAMIC REVENUES,R E C O N C I L I A T IPORNO OF IFT I &N CLOOMS SE OPERATING AND RISK COSTS UNDER CONTROL Drivers for year on year change in attributable net profit Development of quarterly net profit… (as of 31 December 2022) +11.0% +37.9% +0.5% 6,837 410 39 4,806 4,169 4,608
Slide 13: Moderate balance sheet growth
STATEMENT OF FINANCIAL POSITION MODERATE BALANCE SHEET GROWTH Assets Liabilities and Equity CZK billion CZK billion +4.8% +4.8% YoY YoY 1,304 1,304 1,244 1,244 85 +2.2% 248 -13.8% 83 287 951 -0.7% +7.8% 957 781 725 12 39 >100% 227 +18.8% 14 61 2 94 +53.7% 191 42 48 127 123 -2.6% 31 Dec 2021 31 Dec 2
Slide 14: NII trend reflecting higher deposit costs
NET INTEREST INCOME NII TREND REFLECTING HIGHER DEPOSIT COSTS Net interest margin (%) QtD +10.6% NII YtD -2.9% 2.42% 7,302 7,342 7,132 2.09% 1.93% 2.22% 2.22% 2.17% 2.22% 2.12% 2.25% 2.21% 6,856 1.68% 1.70% 6,448 660 821 494 742 5,390 332 229 3,265 3,049 3,121 3,534 3,361 3Q 2021 4Q 2021 1Q 2022 2Q
Slide 15: Growth in fees driven by income from transactions, mutual funds, guarantees
GROWTH IN FEES DRIVEN BY INCOME FROM N E T F E E S A N D C O M M I S S I O N S TRANSACTIONS, MUTUAL FUNDS, GUARANTEES +8.4% NFC ▪ Transaction fees – YoY Growth mainly driven by card fees but +13.2% all main transaction types up. Seasonal boost in Q4 1,673 1,544 1,493 1,477 1,478 1,376 512 ▪ Deposit
Slide 16: Solid activity maintained
NET PROFIT FROM FINANCIAL OPERATIONS SOLID ACTIVITY MAINTAINED NPFO ▪ Solid client FX flows and hedging activity +11.6% -22.1% ▪ Demand for IR hedging lower in the second half affected by 1,000 1,081 967 higher rates and worsened confidence levels 864 675 753 591 624 357 408 ▪ Higher share of tradin
Slide 17: Opex under control despite inflation, transformation and regulatory charges
OPEX UNDER CONTROL DESPITE OPERATING EXPENDITURES INFLATION, TRANSFORMATION AND REGULATORY CHARGES Average number of employees (quarterly) +5.1% OPEX 4Q22/4Q21 +7.6% -1.5% 7,621 7,635 7,564 7,482 7,447 7,524 4Q22/3Q22 -1,933 -1,939 -1,871 -1,916 -1,944 -2,003 +1.0% 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q
Slide 18: Contents
CONTENTS Highlights as of 31 December Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital & dividends Outlook for 2023 Appendix KB GROUP AS OF 31 DECEMBER 2022│ 8 FEBRUARY 2023 │ 18
Slide 19: 4Q 2022 asset quality
LOAN PORTFOLIO QUALITY 4Q 2022 ASSET QUALITY Gross lending CZK billion ▪ Loan portfolio up by 6.2% YoY, down by 0.3% QoQ 769.4 787.2 784.9 724.8 738.9 750.7 ▪ Resilient credit risk profile • Stage 2 share stable at 13.1% 698.8 664.1 663.5 • Contained NPL ratio at 2.3% 663.6 663.3 672.4 o Continued s
Slide 20: 4Q 2022 cost of risk development
COST OF RISK 4Q 2022 COST OF RISK DEVELOPMENT Total Cost of Risk (Year-to-date, in basis points) 43 40 ▪ 4Q 2022 CoR net release at CZK 50 million 34 37 24 21 22 13 10 15 14 15 8 ▪ CZK 193 million in net releases on non-retail portfolios -3 7 9 • Full release of Covid reserves -5 -17 • Provisions cr
Slide 21: Contents
CONTENTS Highlights as of 31 December Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital & dividends Outlook for 2023 Appendix KB GROUP AS OF 31 DECEMBER 2022│ 8 FEBRUARY 2023 │ 21
Slide 22: Capital ratios in Q4 influenced by payment of catch-up dividend
CAPITAL RATIOS IN Q4 INFLUENCED CAPITAL, RWA BY PAYMENT OF CATCH-UP DIVIDEND Contributions to capital adequacy ratio in FY 2022 (%) Contributions to equity in FY 2022 (CZK million) -185 bps 21.31 -2.36 126,782 17,556 -18,753 0.92 3.62 123,435 -2.16 19.45 -2,109 -1.36 -0.30 -41 -0.22 31 Dec RWA RWA I
Slide 23: Dividend proposed at a sustainable level
DIVIDENDS DIVIDEND PROPOSED AT A SUSTAINABLE LEVEL ▪ KB’s Board of Directors intends to maintain its standard dividend policy of paying out Dividend history (Dividend per share, in CZK) between 60-70% of net profit generated in the preceding year, by proposing to the Annual CZK Pandemic % General Me
Slide 24: Contents
CONTENTS Highlights as of 31 December Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital & dividends Outlook for 2023 Appendix KB GROUP AS OF 31 DECEMBER 2022│ 8 FEBRUARY 2023 │ 24
Slide 25: Outlook for 2023
OUTLOOK FOR 2023 OUTLOOK FOR 2023 Investors are advised to consider high level of uncertainty and risks when formulating their investment decisions Macroeconomic • Czech economy expected to grow marginally in 2023, on a gradual recovery path, with positive contribution from fixed assumptions investm
Slide 26: Contents
CONTENTS Highlights as of 31 December Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital & dividends Outlook for 2023 Appendix KB GROUP AS OF 31 DECEMBER 2022│ 8 FEBRUARY 2023 │ 26
Slide 27: Number of clients and distribution network
KB GROUP CLIENTS AND DISTRIBUTION NETWORK NUMBER OF CLIENTS AND DISTRIBUTION NETWORK 2021 2022 YoY Number of bank clients (thousands, CZ) Number of clients 1,664 1,667 1,664 1,652 1,641 1,625 KB Group's clients 2,251,000 2,240,000 -11,000 Komerční banka 1,625,000 1,652,000 27,000 – individual client
Slide 28: 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) 1,145,000; 69.3% 4Q 2022 CZK 112.9 billion (+ 32% YoY) 1,200 0%
Slide 29: Income statement
CONSOLIDATED INCOME STATEMENT INCOME STATEMENT Profit and Loss Statement Reported Change (CZK million, unaudited) FY 2021 FY 2022 YoY Net interest income 21,795 28,632 31.4% Net fee & commission income 5,711 6,121 7.2% Net profit of financial operations 3,630 3,666 1.0% Dividend and other income 210
Slide 30: Income statement
CONSOLIDATED INCOME STATEMENT INCOME STATEMENT Profit and Loss Statement Reported Change Change (CZK million, unaudited) 4Q 2021 3Q 2022 4Q 2022 YoY QoQ Net interest income 6,448 7,342 7,132 10.6% -2.9% Net fee & commission income 1,544 1,478 1,673 8.4% 13.2% Net profit of financial operations 675 9
Slide 31: Balance sheet
CONSOLIDATED STATEMENT OF FINANCIAL POSITION BALANCE SHEET Balance Sheet 31 Dec 31 Dec YoY YoY (CZK million, unaudited) 2021 2022 rel. abs. Assets 1,244,353 1,304,063 4.8% 59,710 Cash and current balances with central bank 29,947 14,190 -52.6% -15,757 Loans and advances to banks 257,196 233,398 -9.3
Slide 32: Capital & profitability indicators
FINANCIAL RATIOS CAPITAL & PROFITABILITY INDICATORS Reported (year-to-date, IFRS 9) 31/12/2021 31/12/2022 Capital adequacy 21.3% 19.5% Tier 1 ratio = Core Tier 1 ratio 20.9% 18.9% Risk weighted assets for credit risk (CZK billion) 400.2 430.8 Net interest margin, annualised 1.9% 2.4% Loan (net) / de
Slide 33: MREL target and fulfilment status, Tier 2
MREL, TIER 2 MREL TARGET AND FULFILMENT STATUS, TIER 2 • As of 1 January 2023, the recommended volume of KB Group’s MREL was at 17.4% of the consolidated total risk exposure. Own funds and eligible liabilities (for MREL) • As of 1 January 2024, based on the CNB general approach, MREL is expected to
Slide 34: Capital requirements overview 2020 - 2023
REGULATORY CAPITAL REQUIREMENTS CAPITAL REQUIREMENTS OVERVIEW 2020 - 2023 As from 01/01/2020 01/04/2020 01/07/2020 01/10/2021 01/03/2022 01/07/2022 01/10/2022 01/01/2023 01/04/2023** Own funds 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% Systemic risk buffer 3.00% 3.00% 3.00% n.a. n.a. n.a.
Slide 35: Windfall tax
WINDFALL TAX WINDFALL TAX The new tax, so called ‘windfall tax’ was approved by the Parliament as an amendment to the income tax law. The main characteristics (related to banks) of the windfall tax: • The windfall tax will be applied to profits of the years 2023, 2024 and 2025, but not 2022. • The w
Slide 36: FY 2022 cost of risk structure
APPENDIX - COMPOSITION OF FY 2022 COST OF RISK FY 2022 COST OF RISK STRUCTURE Key components Contribution to FY 2022 CoR (bps) Non-retail NPL portfolio 2 bps Retail NPL portfolio -1 bps Non-retail performing portfolio (Stage 1 & 2) 8 bps Retail performing portfolio (Stage 1 & 2) 6 bps Total 15 bps K
Slide 37: Business performance of subsidiaries 1/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 1/2 FY 2021 FY 2022 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 35,695 15,169 -58% Volume of total loans (gross, CZK million) 76,030 85,266 12% Volume of deposits (CZK million) 60,90
Slide 38: Business performance of subsidiaries 2/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 2/2 FY 2021 FY 2022 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 63,283 76,132 20% Volume of total financing (gross, CZK million) 11,392 10,144 -11% Average number of FTEs 41 41 0% KB Pojiš
Slide 39: Debt securities portfolio in the banking book
SECURITIES DEBT SECURITIES PORTFOLIO IN THE BANKING BOOK CZK billion 171.9 147.6 141.8 112.1 Slovakia 4.7 161.1 10.7 6.0 Poland 0.0 35.5 30.1 31/12/2021 31/12/2022 Czech sovereign securities Debt securities at amortized cost Foreign government bonds Debt securities at FV through OCI Corporations Not
Slide 40: 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 3.6 2.5 0.3 2.4 Inflation (%, average) 2.5 2.1 2.8 3.2 3.8 15.1 12.9 2.5 Household consumption (%, average) 4.0 3.3 2.6 -7.4 4.2 -0.6 -1.9 4.0 Unemployment (%
Slide 41: Interest rates evolution
INTEREST RATES EVOLUTION For the period 1 Jan 2015 – 31 January 2023 KB GROUP AS OF 31 DECEMBER 2022│ 8 FEBRUARY 2023 │ 41
Slide 42: KB #1 listed Czech bank
KB #1 LISTED CZECH BANK Development of KB share price and PX index (1 January 2001 – 31 January 2023) Shareholder structure Free-float 39.6% Société Générale 60.4% • The number of shareholders comprised 69,034 corporate entities and private individuals • Of the Bank’s total share capital of CZK 19,0
Slide 43: 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 2022│ 8 FEBRUARY 2023