Komercni Banka, A.s. · PSECZ:KOMB
Komercni Banka, A.s — Q1 2018 Earnings Presentation
40 slides from Komercni Banka, A.s's earnings presentation, May 4, 2018
Slide 1: Komerční banka Group Financial results as of 31 March 2018
Kome rč ní ba nk a Group F i nanc i al res ul t s as of 3 1 Marc h 2 0 18 A C C O R D I N G T O I N T E R N A T I O NA L F I N A N CI A L R E P O R T IN G S T A N D A R DS , C O N S O LI D A TE D, U N A U D IT E D PRAGUE, 4 MAY 2018
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 │ MACROECONOMIC ENVIRONMENT 4 │ HIGHLIGHTS OF KB’S PERFORMANCE 6 │ KB CHANGE 2020 STRATEGIC UPDATE 7 │ BUSINESS PERFORMANCE 14 │ FINANCIAL PERFORMANCE 18 │ ASSET QUALITY & COST OF RISK 27 APPENDIX 30 KB GROUP AS OF 31 MARCH 2018 04 MAY 2018 3
Slide 4: Macroeconomic Environment, Highlights of KB's Performance
MACROECONOMIC ENVIRONMENT HIGHLIGHTS OF KB’s PERFORMANCE
Slide 5: Economy running at full steam but inflation remains muted
ECO NO MY O F T HE CZECH REP UBLI C ECONOMY RUNNING AT FULL STEAM BUT INFLATION REMAINS MUTED GDP in 4Q17 up 0.5% QoQ, +5.2% YoY. Growth was driven by Real GDP outlook (YoY, %) all demand-side components except net exports. Private consumption and investments were the main growth drivers, contribu
Slide 6: KB in first quarter 2018: acquiring clients, growing loans, deposits
HI GHLI GHT S KB IN FIRST QUARTER 2018: ACQUIRING CLIENTS, GROWING LOANS, DEPOSITS, MUTUAL FUNDS, PENSION ASSETS, UPDATING STRATEGY (Year on year change) Komerční banka and KB Group increasing the number of clients. Number of bank clients Number of Mobilní banka users rose by 142,000 to 475,000 up b
Slide 7: KB Change 2020 Strategic Update
KB CHANGE 2020 STRATEGIC UPDATE
Slide 8: Key challenges underlying the need to change
KEY CHALLENGES KEY CHALLENGES UNDERLYING THE NEED TO CHANGE COMPETITION Margins on the Czech market recorded a sharp decline over the past 6 years and approached Western European levels The decline is expected to continue, albeit at slower pace, as the Czech market remain attractive for EROSION
Slide 9: Strategic vision of Komerční banka
V I S I O N AND MI S S I O N STRATEGIC VISION OF KOMERČNÍ BANKA Mission The real bank for real situations "Who is KB?" We stand by ambitious affluent and high potential individuals and their families, small Vision businesses and corporations, support them throughout their lifetime journeys and diver
Slide 10: Segment strategic directions – Individual clients
S T RAT EGI C UP DAT E - I NDI V I DUALS SEGMENT STRATEGIC DIRECTIONS – INDIVIDUAL CLIENTS Segment strategic directions Ambitions by 2020 Steps to be taken • Leadership position in customer • Implement proactive appointment- • Best-in-class advisory and lifetime satisfaction mainly on higher-end bas
Slide 11: Segment strategic directions – Small and medium-sized enterprises
S T RAT EGI C UP DAT E – S ME SEGMENT STRATEGIC DIRECTIONS – SMALL AND MEDIUM-SIZED ENTREPRISES Segment strategic directions Ambitions by 2020 Steps to be taken • Faster and simple lending process • Standing by the business clients of all • Leadership position in customer based on automated credit s
Slide 12: Segment strategic directions – Corporate & Investment Banking
S T RAT EGI C UP DAT E – CI B SEGMENT STRATEGIC DIRECTIONS – CORPORATE & INVESTMENT BANKING Segment strategic directions Ambitions by 2020 Steps to be taken • Provide the broadest product portfolio • Faster and simple lending process backed-up by Société Générale • Confirm leadership in NPS based on
Slide 13: Organisational optimisation
O RGANI S AT I O NAL O P T I MI S AT I O N ORGANISATIONAL OPTIMISATION Implementation of Delayering and Advanced data agile@scale optimisation of span of analytics and reporting organisational model control Change and improvement Fostering leadership, activities to be organised in delegation and inf
Slide 14: Financial assessment
S T RAT EGI C UP DAT E - FI NANCI AL AS S ES S MENT FINANCIAL ASSESSMENT Key financial benefits of the KB Change 2020 plan • Revenue increase, mainly driven by higher volume of loans and assets under management, • OPEX savings from improved efficiency and branch network downsizing, • CAPEX savings f
Slide 15: Business Performance
BUSINESS PERFORMANCE
Slide 16: Selected deals of the first quarter of 2018
S ELECT ED DEALS SELECTED DEALS OF THE FIRST QUARTER OF 2018 REAL ESTATE MANUFACTURING TRANSPORTATION CONTERA Investment III. s.r.o. TESCAN ORSAY HOLDING, a.s. Dopravní podnik města Děčína, a.s. Real Estate Financing Acquisition Financing Investment Financing CZK 425,000,000 EUR 12,000,000 CZK 144,8
Slide 17: Growth in over-liquid market
LO ANS T O CLI ENT S GROWTH IN OVER-LIQUID MARKET Gross loans up by 2.8% YoY, +1.1% QoQ to CZK 612.7 Group lending (including repo, incl. client bonds) billion (excluding repo operations but including Debt CZK billion 615.2 625.8 607.4 628.3 securities issued by KB’s corporate clients). Including
Slide 18: Deposit growth faster in retail
DEP O S I T S AND O T HER AS S ET S UNDER MANAGEMENT DEPOSIT GROWTH FASTER IN RETAIL Standard Group deposits (excluding repo) up +4.3% Group deposits (incl. repo operations) CZK billion 797.1 814.7 YoY to CZK 790.7 billion. Seasonally +4.6% QoQ after 758.2 781.9 762.0 699.4 62.5 61.6 4Q 2017 was a
Slide 19: Financial Performance
FINANCIAL PERFORMANCE
Slide 20: Correction in net profit linked to normalisation of financial operations gains
CO NS O LI DAT ED I NCO ME S T AT EMENT CORRECTION IN NET PROFIT LINKED TO NORMALISATION OF FINANCIAL OPERATIONS GAINS AND SMALLER CONTRIBUTION FROM ONE-OFFS Profit and Loss Statement Reported* Recurring Change Change (CZK million, unaudited) 1Q 2017 1Q 2018 1Q 2017 1Q 2018 YoY YoY Net interest inco
Slide 21: Balance sheet structure influenced by IFRS 9 application
CO NS O LI DAT ED S T AT EMENT O F FI NANCI AL P O S I T I O N BALANCE SHEET STRUCTURE INFLUENCED BY IFRS 9 APPLICATION 31 Mar 31 Dec 1 Jan * Balance Sheet 2017 2017 2018 31 Mar 2018 Ytd According According According According (CZK million, unaudited) to IAS 39 to IAS 39 to IFRS 9 to IFRS 9 Assets 1
Slide 22: Equity driven by earnings
EQ UI T Y EQUITY DRIVEN BY EARNINGS Total equity increased year to date by 2.9% to Contributions to equity in FY 2017 CZK 101.0 billion due to accumulation of 2,999 75 101,041 retained earnings 98,162 -195 Sensitivity of equity account (or Other comprehensive income) to changes in interest rates
Slide 23: Strong capital & liquidity
FI NANCI AL RAT I O S STRONG CAPITAL & LIQUIDITY PROFITABILITY INDICATORS INFLUENCED IN FIRST QUARTER BY IFRIC 21 Reported Recurring (year-to-date, IFRS9) 31/03/2017 31/12/2017 31/03/2018 31/03/2017 31/03/2018 Capital adequacy 15.7% 18.6% 18.3% Tier 1 ratio = Core Tier 1 ratio 15.7% 18.0% 17.7% Risk
Slide 24: Benefit of increasing interest rates partly offset by loan margin pressure
NET I NT ERES T AND S I MI LAR I NCO ME BENEFIT OF INCREASING INTEREST RATES PARTLY OFFSET BY LOAN MARGIN PRESSURE 5,349 5,214 5,196 5,211 5,364 5,349 Net interest income in 1Q 2018 +2.6% YoY. NII 289 306 311 322 351 380 in 1Q 2018 was down -0.3% QoQ 2,769 2,682 2,709 2,648 2,663 2,527 NII from
Slide 25: Seasonally lower fee income in first quarter
NET FEES AND CO MMI S S I O NS SEASONALLY LOWER FEE INCOME IN FIRST QUARTER 1,610 1,640 NFC in 1Q 2018 down by 0.7% YoY. Seasonally 1,547 1,519 1,505 1,515 267 229 lower by -8.2% v. 4Q 2017 201 203 196 210 177 187 183 178 176 186 Deposit product fees increased as the number of 204 180 177 183 18
Slide 26: Financial gains lower compared to extraordinary 2017
NET P RO FI T FRO M FI NANCI AL O P ERAT I O NS FINANCIAL GAINS LOWER COMPARED TO EXTRAORDINARY 2017 1,051 NPFO in 1Q 2018 down by 37.2% YoY and lower 941 826 862 by -23.4% QoQ. 722 660 739 YoY decrease in NPFO expected as 2017 was 504 653 560 424 351 boosted by significant client activity aroun
Slide 27: Recurring costs up less than the inflation
O P ERAT I NG EX P ENDI T URES RECURRING COSTS UP LESS THAN THE INFLATION 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 Recurring OPEX for 1Q 2018 grew by +1.3% YoY1. 1 Reported OPEX in 1Q 2018 decreased by -4.5% YoY. -1,790 -1,763 -1,868 -1,887 -1,803 -1,847 OPEX in 1Q 2018 up +14.6% QoQ infl
Slide 28: Asset Quality, Cost of Risk
ASSET QUALITY COST OF RISK
Slide 29: Sound asset quality
LO AN P O RT FO LI O Q UALI T Y SOUND ASSET QUALITY Gross lending CZK billion Loan exposure up 5.4% YoY, up 3.5% QoQ 596.1 615.2 625.8 607.4 607.4 628.3 IFRS9 provisioning standard implementation 565.3 585.5 596.8 579.3 565.8 587.8 Limited financial impact (one-off increase of stock of provisi
Slide 30: Cost of risk at exceptionally low level
CO S T O F RI S K COST OF RISK AT EXCEPTIONALLY LOW LEVEL Total Cost of Risk (Year-to-date, in basis points) Net release of CoR in 1Q 2018 at CZK 83 71 million (vs. net release of CoR in 1Q 2017 at CZK 83 million) 32 13 11 -3 4 Cost of Risk on Corporates at -12 bps in 1Q 0 -1 -3 -5 -6 -5 2018 (v
Slide 31: Appendix
APPENDIX
Slide 32: Number of clients and distribution network
K B GR OU P C L I EN TS A N D D I STR I B U TI ON N ER W OR K NUMBER OF CLIENTS AND DISTRIBUTION NETWORK Number of bank clients (thousands, CZ) KB Group’s 2.4 million clients(+0.4%), of which KB bank 1,666,000 clients (1%) MPSS 486,000 clients (0%) KBPS 532,000 clients (0%) 1,654 1,664 1,666
Slide 33: Quarterly results influenced by seasonality
CO NS O LI DAT ED I NCO ME S T AT EMENT – Q UART ERLY V I EW QUARTERLY RESULTS INFLUENCED BY SEASONALITY Profit and Loss Statement Change Change (CZK million, unaudited) 1Q 2017 4Q 2017 1Q 2018 YoY QoQ Net interest income and similar income 5,214 5,364 5,349 2.6% -0.3% Net fee & commission income 1,
Slide 34: Comparative indicators under IAS 39 and IFRS 9
FI NANCI AL RAT I O S COMPARATIVE INDICATORS UNDER IAS 39 AND IFRS 9 Reported Recurring (year-to-date, IFRS9) 31/03/2017 31/12/2017 31/03/2018 31/03/2017 31/03/2018 IAS 39 IFRS 9 IAS 39 IFRS 9 IFRS 9 IAS 39 IFRS 9 IFRS 9 Capital adequacy 15.7% 15.7% 18.6% 18.6% 18.3% Tier 1 ratio = Core Tier 1 ratio
Slide 35: Business performance of subsidiaries 1/2
OVER VI EW OF K B SU B SI D I A R I ES BUSINESS PERFORMANCE OF SUBSIDIARIES 1/2 1Q 2017 1Q 2018 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 3,358 3,589 7% Volume of total loans (gross, CZK million) 39,453 45,230 15% Volume of deposits (CZK million
Slide 36: Business performance of subsidiaries 2/2
OVER VI EW OF K B SU B SI D I A R I ES BUSINESS PERFORMANCE OF SUBSIDIARIES 2/2 1Q 2017 1Q 2018 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 9,598 11,681 22% Volume of total financing (gross, CZK million) 7,241 7,865 9% Average number of FTEs 45 44 -2% K
Slide 37: Macroeconomic environment – Czech Republic
MACROECONOMIC ENVIRONMENT – CZECH REPUBLIC Macroeconomic Indicators 2015 2016 2017* 2018* 2019* Real GDP (%, average) 5.4 2.5 4.6 3.8 2.5 Inflation (%, average) 0.3 0.7 2.5 2.1 2.1 Household consumption (%, average) 3.8 3.6 4.2 3.9 2.9 Unemployment (%, av., MLSA meth.) 6.4 5.4 4.1 3.5 4.8 M2 (%, ave
Slide 38: Interest rates evolution
INTEREST RATES EVOLUTION (for the period 1 January 2006 – 29 March 2018) KB GROUP AS OF 31 MARCH 2018 04 MAY 2018 38
Slide 39: KB #1 listed Czech bank
K B SH A R ES A N D SH A R EH OL D ER S KB #1 LISTED CZECH BANK As of 31 March 2018 Development of KB share price and PX index (1 January 2006 – 29 March 2018) The number of shareholders comprised 47,959 corporate entities and private individuals. Of the Bank’s total share capital of CZK 19,004,
Slide 40: Investor Relations
Investor Relations Jakub Černý, Renata Swaczynová, Marcela Ondrušová Tel.: +420 955 532 156, 955 532 155, 955 532 734 E-mail: investor_relations@kb.cz - Internet: www.kb.cz KB GROUP AS OF 31 MARCH 2018 04 MAY 2018 40