Komercni Banka, A.s. · PSECZ:KOMB
Komercni Banka, A.s — H1 2023 Earnings Presentation
45 slides from Komercni Banka, A.s's earnings presentation, Aug 3, 2023
Slide 1: Komerční banka Group consolidated unaudited results as of 30 June 2023
Prague, 3 August 2023 Komerční banka Group Consolidated unaudited results as of 30 June 2023
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: Agenda
Agenda Highlights as of 30 June 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 ESG strategy and implementation Appendix KB Group results as of 30 June 2023 3
Slide 4: Highlights of H1 & Q2 2023
Highlights of H1&Q2 2023 First half 2023: Successful start to KB’s new era of banking Solid business Strong balance sheet First half 2023 Second quarter 2023 performance Group net income Group net income Client loans Liquidity coverage ratio CZK 8.1billion CZK 4.5 billion +3.3 % YoY +0.7% QoQ 169 %
Slide 5: Agenda
Agenda Highlights as of 30 June 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 ESG strategy and implementation Appendix KB Group results as of 30 June 2023 5
Slide 6: Economic recovery in sight, no rate cuts this year
Macro Economic recovery in sight No rate cuts this year Czech GDP development (% year-on-year) 10 3.6 GDP in Q2 231 up +0.1% QoQ but down -0.6% YoY. Economic activity hindered mainly 5 3.0 0.1 1.8 2.4 by weak household consumption and fixed investments, while net exports contribute positively 0 Grow
Slide 7: Agenda
Agenda Highlights as of 30 June 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 ESG strategy and implementation Appendix KB Group results as of 30 June 2023 7
Slide 8: Loans to clients
Loans to clients Total loans to clients up 3.3% Group lending (w/o repo, but incl. client bonds) Recovering production of housing loans (CZK billion) 3.3% +0.7% Net loans to deposits ratio at 80.2%. Liquidity coverage ratio 169% 750.7 769.4 787.2 784.9 789.1 794.6 78.8 81.5 83.8 85.3 86.5 88.5 8.5%
Slide 9: Corporate deals during the first half of 2023
Selected deals Corporate deals during the first half of 2023 KB Group results as of 30 June 2023 9
Slide 10: Deposits and other AUM
Deposits and other AUM Deposits -2.9% YoY but recovering YtD Group deposits (excluding repo operations) Other AUM up 14.6% YoY (CZK billion) -2.9% +1.5% Non-deposit assets under management (CZK million) 1,015.1 1,024.3 1,010.1 979.5 994.7 +14.6% 916.8 58.9 58.0 56.6 54.2 53.9 -7.0% 56.0 +3.8% 352.1
Slide 11: Agenda
Agenda Highlights as of 30 June 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 ESG strategy and implementation Appendix KB Group results as of 30 June 2023 11
Slide 12: Profit & Loss
Profit & Loss Growth in non-interest revenues Development of quarterly net profit … (CZK million) Excellent asset quality -6.0% +27.1% Drivers for year on year change in attributable net profit 4,812 4,694 4,602 4,525 (as of 30 June 2023) 3,513 3,561 -2.9% 8,325 148 8,086 1,461 80 196 4 -109 -1,345
Slide 13: Balance sheet growing year-to-date
Statement of financial position Balance sheet growing year-to-date Assets Liabilities and Equity (CZK billion) -1.6% Year-on-year (CZK billion) -1.6% Year-on-year +12.4% +12.4% 1,491 1,467 1,491 1,467 1,305 147 1,305 105 -28.5% 477 395 -17.1% 85 248 1,092 -1.1% 1,104 951 758 781 798 5.3% 12 49 -5.9%
Slide 14: Strong capital position above regulatory requirements
Capital Strong capital position above regulatory requirements Contributions to shareholders’ equity in 1H 2023 (CZK million) 124,676 8,086 -11,411 Total capital adequacy at 20.0% over the applicable minimum of 17.6% 120,881 CET 1 ratio at 19.5% over the required 12.9% (minimum T1 at 14.9%) -359 -112
Slide 15: Net interest income
Net interest income Net interest income affected by higher Year-to-date -9.5% average cost of funding (CZK million) 14,157 1,154 6% 12,812 Net interest margin (%) Other 1,226 2.22% 2.22% 2.17% 2.22% 2.12% 2.25% 2.21% 2.42% 2.01% 2.01% 1.91% 1.99% NII from deposits 6,386 -14% 5,515 NII from loans NII
Slide 16: Net fees and commissions
Net fees and commissions Broad-based growth in fees Year-to-date +2.7% (CZK million) 2,969 3,049 Transaction fees Transaction fees 4% 887 856 Transaction activity trending up for all non-cash transaction types, mainly for Deposit product fees card payments 379 7% 406 Loan fees 212 3% 218 Deposit pro
Slide 17: Net profit from financial operations
Net profit from financial operations Solid gains from financial operations Year-to-date +6.0% (CZK million) 1,946 2,063 Capital markets Capital markets Solid client activity in FX & IR hedging and trading, influenced by evolving Net gains on FX from payments 981 3% 1,008 expectations for rates devel
Slide 18: Operating expenditures
Operating expenditures Operating expenditures well controlled Year-to-date +8.0% (CZK million) Personnel expenses - number of employees (average FTE) in 1H 2023: 7,549 Personnel costs -3,787 7% -4,069 (+0.4 YoY). Temporary recent increment due to hiring and insourcing of IT specialists. GAE (excl. R
Slide 19: Agenda
Agenda Highlights as of 30 June 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 ESG strategy and implementation Appendix KB Group results as of 30 June 2023 19
Slide 20: Loan portfolio quality
Loan portfolio quality 2Q 2023 Asset quality Group lending (CZK billion) 769.4 787.2 784.9 789.1 794.6 750.7 Loan portfolio up by 3.3% YoY and 0.7% QoQ 698.8 664.1 663.5 665.8 672.9 Resilient credit risk profile 672.4 • Stable Stage 2 share at 13% • Stable NPL ratio at 2.1% 60.1 18.2 51.9 18.7 105.2
Slide 21: Cost of risk
Cost of risk 2Q 2023 Cost of risk development Total Cost of risk (Year-to-date, in basis points) 40 37 24 22 2Q 2023 CoR net release at CZK 467 million. 1H 2023 CoR net release 14 21 15 15 8 CZK 899 million (-22bps) 6 7 8 9 -21 CZK 501 million in net provision releases recorded on non-retail -5 -22
Slide 22: Agenda
Agenda Highlights as of 30 June 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 ESG strategy and implementation Appendix KB Group results as of 30 June 2023 22
Slide 23: Outlook for the rest of 2023
Outlook for 2023 Outlook for the rest of 2023 The below text updates and replaces outlook for 2023 first presented on 8 February 2023 alongside release of KB’s full year 2022 results. Investors are advised to consider high level of uncertainty and risks when formulating their investment decisions •
Slide 24: Agenda
Agenda Highlights as of 30 June 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 ESG strategy and implementation Appendix KB Group results as of 30 June 2023 24
Slide 25: KB Group's ESG strategy aligned with KB 2025 strategic programme
ESG Strategy KB Group’s ESG strategy aligned with KB 2025 strategic programme BUILDING TOGETHER, WITH OUR CLIENTS, A BETTER AND SUSTAINABLE FUTURE THROUGH RESPONSIBLE AND INNOVATIVE FINANCIAL SOLUTIONS KB’s strategic ambition is to be a leader in sustainable banking on the Czech financial market and
Slide 26: Materiality assessment underlying ESG strategy
ESG materiality assessment Materiality assessment underlying ESG strategy 2023 Materiality analysis outcome Annual assessment of ESG relevant issues from the perspective of double materiality: • for its implications on KB Group’s business, financial and risk outlook, and thus financial value, and •
Slide 27: Culture of responsibility
Achievements in governance & risk management Culture of responsibility Leadership & Governance Bank of the Year 2022 Two-tier Management / Supervisory Board structure with separate Corporate bank of the Year executive and control functions Bank without Barriers Supervisory Board: 9 members incl. 2 i
Slide 28: Supporting energy transition, decarbonization and sustainable economy
Environmental transition Supporting energy transition, decarbonization and sustainable economy Corporate banking Retail banking Sustainability of own operations Lending with sustainable positive impact New era of banking written by KB Scope 1+2 emissions +42 % Year over year • Fully paperless digita
Slide 29: Positive local impact
Adressing social issues Positive local impact Client satisfaction and protection, Supporting our communities Responsible employer access to financial services Net promoter score Nadace KB Jistota Foundation Promotion of social inclusion and diversity 40 Individuals 59 Large corporates* CZK 32 millio
Slide 30: ESG commitments adopted
ESG commitments & assessments ESG commitments adopted Current ESG ratings Commitments adopted by KB • Corporate Governance Code of the Czech Republic • CBA Memorandum for Sustainable Finance • Policy of diversity, signatory to the Diversity charter • Principles of Suitability for the Supervisory Boa
Slide 31: Agenda
Agenda Highlights as of 30 June 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 ESG strategy and implementation Appendix KB Group results as of 30 June 2023 31
Slide 32: Number of clients and distribution network
KB Group clients and distribution network Number of clients and distribution network Number of bank clients (thousands, CZ) 30-Jun-22 30-Jun-23 YoY 1,667 1,664 1,641 1,625 1,652 1,661 Number of clients KB Group’s clients 2,256,000 2,227,000 -29,000 Komerční banka 1,650,000 1,661,000 11,000 – individ
Slide 33: Income statement
Consolidated income statement Income statement (CZK million, unaudited) 1H 2022* 1H 2023 YoY Net interest income 14,157 12,812 -9.5% Net fee & commission income 2,969 3,049 2.7% Net profit of financial operations 1,946 2,063 6.0% Dividend and other income 96 175 82.3% Net banking income 19,168 18,09
Slide 34: Income statement
Consolidated income statement Income statement (CZK million, unaudited) 2Q 2022* 1Q 2023 2Q 2023 YoY QoQ Net interest income 7,302 6,349 6,463 -11.5% 1.8% Net fee & commission income 1,477 1,515 1,534 3.9% 1.3% Net profit of financial operations 864 1,000 1,063 23.0% 6.3% Dividend and other income 4
Slide 35: Balance sheet
Consolidated statement of financial position Balance sheet (CZK million, unaudited) 30-Jun-22* 31-Dec-22 * 30-Jun-23 YoY rel. YoY abs. Ytd rel. Ytd abs. Assets 1,490,502 1,305,304 1,467,274 -1.6% -23,228 12.4% 161,970 Cash and current balances with central bank 21,383 14,190 11,913 -44.3% -9,470 -16
Slide 36: Capital & profitability indicators
Financial ratios Capital & profitability indicators Adjusted for IFRIC 21 Reported linearisation* (year-to-date, IFRS 9) 30-Jun-22 31-Dec-22 30-Jun-23 30-Jun-22 30-Jun-23 Capital adequacy 20.3% 19.5% 20.0% Tier 1 ratio = Core Tier 1 ratio 20.0% 18.9% 19.5% Risk weighted assets for credit risk (CZK b
Slide 37: 1H 2023 Cost of risk structure
Composition of Cost of risk 1H 2023 Cost of risk stucture Key components Contribution to 1H 2023 CoR (bps) Non-retail NPL portfolio -24 bps Retail NPL portfolio 2 bps Non-retail performing portfolio (Stage 1 & 2) -2 bps Retail performing portfolio (Stage 1 & 2) 2 bps Total -22 bps KB Group results a
Slide 38: Business performance of subsidiaries (1/2)
Overview of KB subsidiaries Business performance of subsidiaries (1/2) 1H 2022 1H 2023 YoY Modrá pyramida (100%) #2 building savings & loans company Volume of new loans (CZK million) 10,708 4,975 -54% Volume of total loans (gross, CZK million) 81,547 88,485 9% Volume of deposits (CZK million) 57,967
Slide 39: Business performance of subsidiaries (2/2)
Overview of KB subsidiaries Business performance of subsidiaries (2/2) 1H 2022 1H 2023 YoY Factoring KB (100%) #1 on the Czech factoring market Factoring turnover (CZK million) 39,204 37,401 -5% Volume of total financing (gross, CZK million) 10,339 9,414 -9% Average number of FTEs 42 21 -50% KB Poji
Slide 40: Debt securities portfolio in the banking book
Securities Debt securities portfolio in the banking book (CZK bilion) 180.2 154.8 152.9 Slovakia 4.7 123.8 170.0 10.3 5.6 Poland 0.0 31.0 27.4 30/06/2022 30/06/2023 Debt securities at amortized cost Czech sovereign securities Debt securities at FV through OCI Foreign government bonds Corporations No
Slide 41: MREL status, Tier 2
MREL, TIER 2 MREL status, Tier 2 Own funds and eligible liabilities (for MREL) 28.8% Total requirement = MREL + CBR As of 1 January 2023, the recommended volume of KB Group’s MREL was at 17.4% of 8.8% (exp. 27.95% as of 31 Dec 2023) the consolidated total risk exposure and 5.18% of consolidated tota
Slide 42: Macroeconomic environment – Czechia
Czech macroeoconomic environment Macroeconomic environment – Czechia Macroeconomic Indicators 2018 2019 2020 2021 2022 2023* 2024* 2025* Real GDP (%, average) 3.2 3.0 -5.5 3.6 2.4 0.1 1.8 2.1 Inflation (%, average) 2.2 2.9 3.3 3.8 15.1 11.0 1.3 2.2 Household consumption (%, average) 3.3 2.6 -7.4 4.2
Slide 43: Interest rates evolution
Interest rates Interest rates evolution % For the period 1 Jan 2015 – 31 July 2023 8 7 6 5 4 3 2 1 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 3M Pribor 6M Pribor 2W repo 5Y IRS 10Y IRS KB Group results as of 30 June 2023 43
Slide 44: KB - #1 listed Czech bank
KB shares and shareholder structure KB - #1 listed Czech bank Shareholder structure Development of KB share price and PX index (1 January 2001 – 31 July 2023) KB PX 550 500 450 Free-float 400 39.6% 350 300 250 200 60.4% Société Genérále 150 100 50 0 2002 2005 2008 2011 2014 2017 2020 2023 • The numb
Slide 45: 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