Komercni Banka, A.s. · PSECZ:KOMB
Komercni Banka, A.s — H1 2021 Earnings Presentation
44 slides from Komercni Banka, A.s's earnings presentation, Aug 3, 2021
Slide 1: KB Group Results as of 30 June 2021
PRAGUE, 3 AUGUST 2021 KB GROUP RESULTS AS OF 30 JUNE 2021 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 1H 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 Appendix KB GROUP AS OF 30 JUNE 2021│ 3 AUGUST 2021 │ 3
Slide 4: Highlights as of 30 June 2021
HIGHLIGHTS AS OF 30 JUNE 2021 * Accelerating loan KB Group’s lending to customers up by 4.7% YoY, growth pick-up in retail as well as corporate segments. growth, solid deposit Record high sales of housing loans growth Standard client deposits increased by 11.0% YoY, growing both business and ret
Slide 5: Contents
CONTENTS Highlights of 1H 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 Appendix KB GROUP AS OF 30 JUNE 2021│ 3 AUGUST 2021 │ 5
Slide 6: Faster growth and inflation
CZECH ECONOMY FASTER GROWTH AND INFLATION • GDP in 2Q 2021 +0.6% QoQ and +7.8% YoY as per flash estimate. In 2021, Czech GDP growth (%, yoy)3 Czech economy expected to grow by 4.2%, to be driven by household consumption and investments • Czech car production in 1H 2021 up by 31.7% YoY due to last ye
Slide 7: COVID-19 pandemic update
COVID-19 COVID-19 PANDEMIC UPDATE Further re-opening on hold due to spread of Delta variant. Increasing vaccination, low hospitalisation rates Czech Daily Incidence rate (smoothed, per 1M) Pandemic situation: Significantly declining numbers of infected people since April. In July, around 14 infect
Slide 8: Contents
CONTENTS Highlights of 1H 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 Appendix KB GROUP AS OF 30 JUNE 2021│ 3 AUGUST 2021 │ 8
Slide 9: On a path to net zero by 2026
CLIMATE PROTECTION ON A PATH TO NET ZERO BY 2026 • KB commits to reducing its direct emissions (scope 1 and 2) in line with a 1.5°C scenario and will contribute to carbon removal projects with a view to reaching carbon neutrality FTSE4GOOD by 2026 Affirmed KB’s participation to index of companies •
Slide 10: Persistent innovativeness
DIGITAL & INNOVATIONS PERSISTENT INNOVATIVENESS Award for Excellence 2021 - Pioneer category Mobile banking and KB Key For KB’s January issue of EUR denominated Mobile banking – volume of payments mortgage-backed securities that was one of (CZK billion per month) penetration (in ths) the best in cla
Slide 11: Gross lending excluding repo up 4.7% YoY
LOANS TO CLIENTS GROSS LENDING EXCLUDING REPO UP 4.7% YOY Group lending (w/o repo, but incl. client bonds) CZK billion Group business and other loans CZK billion +4.7% (w/o repo, but incl. client bonds) +1.9% +1.6% YoY +1.6% 668.2 676.2 692.3 691.4 694.7 708.1 57.6 59.4 61.7 63.9 66.1 69.0 +16.2% Yo
Slide 12: Selected deals of the 2Q 2021
SELECTED DEALS SELECTED DEALS OF THE 2Q 2021 MULTISECTOR HOLDING COMPANY CONSTRUCTION SERVICE COMPANIES REAL ESTATE Czech Gas Network Investments Energetický a průmyslový holding, a.s. DEK GROUP Avenir Business Park, s.r.o. S.a.r.l. General Corporate Purpose Financing Acquisition Financing Term Loan
Slide 13: Client deposits up by 11.0% YoY, other AUM +4.3%
DEPOSITS AND OTHER AUM CLIENT DEPOSITS UP BY 11.0% YOY, OTHER AUM +4.3% GROUP DEPOSITS (excluding repo operations)LIENT NON-BANK ASSETS UNDER MANAGEMENTLIENT +11.0% CZK billion +1.1% CZK billion +4.3% YoY YoY 930.4 985.7 996.9 +0.3% 188.9 190.4 193.5 894.9 898.4 893.0 179.8 185.4 187.1 60.0 60.5 60.
Slide 14: Contents
CONTENTS Highlights of 1H 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 Appendix KB GROUP AS OF 30 JUNE 2021│ 3 AUGUST 2021 │ 14
Slide 15: Profitability recovering from pandemic hit
R E C O N C I L I A T IPORNO O F IFT I & N CLOOM SSE PROFITABILITY RECOVERING FROM PANDEMIC HIT Drivers for year on year change in attributable net income (as of 30 June 2021) +15.5% 5,126 4,437 1,061 -79 -133 -887 166 215 443 -97 Reported NII NFC NPFO & Regulatory OPEX CoR Other* Tax Reported 1H 20
Slide 16: Balance sheet growth driven by client deposits and retained earnings
BALANCE SHEET GROWTH DRIVEN BY STATEMENT OF FINANCIAL POSITION CLIENT DEPOSITS AND RETAINED EARNINGS Assets +5.8% Liabilities and Equity CZK billion CZK billion +5.8% +13.0% +13.0% YoY YoY 1,319 1,247 1,319 1,167 1,247 1,167 99 -19.1% 402 +16.0% 122 347 87 286 934 1,033 +10.6% 672 693 +3.1% 906 680
Slide 17: Earnings of 2020 to increase capital base in 2Q 21
CAPITAL, RWA EARNINGS OF 2020 TO INCREASE CAPITAL BASE IN 2Q 21 Contributions to capital adequacy ratio in 2021 (%) Contributions to equity in 2021 (CZK million) +93 bps 557 129 122,870 23.27 22.34 -0.04 5,126 1.80 117,058 -0.69 -0.14 0.00 31 Dec RWA RWA Interim Retained OCI & 30 June 1 Jan 2021 YtD
Slide 18: Interest income bottomed out
NET INTEREST INCOME INTEREST INCOME BOTTOMED OUT Net interest margin (%) QtD NII -0.9% YtD 5,845 -1.0% 2.17% 2.17% 2.03% 1.73% 2.00% 1.80% 1.96% 1.85% 1.73% 1.73% 1.60% 1.70% 343 4,998 5,255 5,262 5,004 4,953 315 365 339 326 343 2,870 2,285 2,474 2,476 2,239 2,158 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q
Slide 19: Fees boosted by recovery in activity, sales of mutual funds, DCM services
FEES BOOSTED BY RECOVERY IN ACTIVITY, NET FEES AND COMMISSIONS SALES OF MUTUAL FUNDS, DCM SERVICES +11.4% ▪ Transaction fees – rebound in activity in 2Q21 in card, non-cash, NFC +3.2% non-branch transactions 1,353 1,374 1,418 Google mobility indices vs. Stringency index 1,350 1,273 1,234 345 406 452
Slide 20: Strong result on large deals, volatility, hedging demand
STRONG RESULT ON LARGE DEALS, NET PROFIT FROM FINANCIAL OPERATIONS VOLATILITY, HEDGING DEMAND NPFO +3.6% ▪ Base from 1H2020 affected by value adjustments of -4.9% derivatives caused by the pandemic outbreak, mostly 920 1,002 953 reversed in later quarters 589 710 666 ▪ Appreciatting CZK and expectat
Slide 21: Operating costs flat
OPERATING EXPENDITURES OPERATING COSTS FLAT Average number of employees (quarterly) -1.5% OPEX 2Q21/2Q20 -19.6% -5.6% 8 8,173 8,128 7,997 7,949 7,820 7,676 2Q21/1Q21 -1,940 -1,947 -1,927 -1,836 -1,824 -1,843 -1.8% 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 -816 -892 -951 -878 -952 -923 -3 -4 -2
Slide 22: Contents
CONTENTS Highlights of 1H 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 Appendix KB GROUP AS OF 30 JUNE 2021│ 3 AUGUST 2021 │ 22
Slide 23: 2Q 2021 asset quality
LOAN PORTFOLIO QUALITY 2Q 2021 ASSET QUALITY Gross lending CZK billion 680.4 695.3 691.4 695.4 708.1 671.1 ▪ Loan exposure up by 4.1 % YoY, up by 1.8% QoQ 620.2 628.4 629.4 628.8 630.7 643.2 ▪ Continued resilience of KB loan portfolios 37.0 37.1 50.1 44.5 44.4 44.7 13.8 14.8 18.2 20.3 20.2 • Stable
Slide 24: 2Q cost of risk development
COST OF RISK 2Q COST OF RISK DEVELOPMENT Total Cost of Risk (Year-to-date, in basis points) ▪ 2Q 2021 CoR net creation at CZK 82 million 91 99 71 68 74 ▪ CZK 138 million created on corporate porfolios 52 68 47 • Portfolio provisions for selected Covid-sensitive sectors 50 43 34 19 10 38 • Limited mi
Slide 25: Contents
CONTENTS Highlights of 1H 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 Appendix KB GROUP AS OF 30 JUNE 2021│ 3 AUGUST 2021 │ 25
Slide 26: Baseline outlook for 2021 (update as of July)
OUTLOOK FOR 2021 BASELINE OUTLOOK FOR 2021 (UPDATE AS OF JULY) Investors are advised to consider higher than usual level of uncertainty and risks Macroeconomic • Czech economy expected to grow by aprox. 4% after a sharp drop in 2020. Growth should be driven assumptions mainly by household consumptio
Slide 27: Contents
CONTENTS Highlights of 1H 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 Appendix KB GROUP AS OF 30 JUNE 2021│ 3 AUGUST 2021 │ 27
Slide 28: Return to normal capital management postponed by extension of dividend restrictions
RETURN TO NORMAL CAPITAL MANAGEMENT PROFIT DISTRIBUTION POSTPONED BY EXTENSION OF DIVIDEND RESTRICTIONS Corres- ▪ In March 2021, the CNB announced that it is setting the profit distribution Pro forma Limitations for dividend ponding Corres- As % of impact restrictions in co-ordination with other reg
Slide 29: Number of clients and distribution network
KB GROUP CLIENTS AND DISTRIBUTION NETWORK NUMBER OF CLIENTS AND DISTRIBUTION NETWORK 2Q 2020 2Q 2021 YoY Number of bank clients (thousands, CZ) Number of clients 1), 2) 1,654 1,664 1,667 1,664 1,641 1,621 1) KB Group's clients 2,312,000 2,244,000 -68,000 1) Komerční banka 1,657,000 1,621,000 -36,000
Slide 30: Income statement
CONSOLIDATED INCOME STATEMENT INCOME STATEMENT Profit and Loss Statement Reported Change (CZK million, unaudited) 1H 2020 1H 2021 YoY Net interest income 10,843 9,956 -8.2% Net fee & commission income 2,626 2,792 6.3% Net profit of financial operations 1,508 1,955 29.6% Dividend and other income 106
Slide 31: Quarterly income statement
CONSOLIDATED INCOME STATEMENT – QUARTERLY VIEW QUARTERLY INCOME STATEMENT Profit and Loss Statement Reported Change Change (CZK million, unaudited) 2Q 2020 1Q 2021 2Q 2021 YoY QoQ Net interest income 4,998 5,004 4,953 -0.9% -1.0% Net fee & commission income 1,273 1,374 1,418 11.4% 3.2% Net profit of
Slide 32: Balance sheet
CONSOLIDATED STATEMENT OF FINANCIAL POSITION BALANCE SHEET Balance Sheet 30 Jun 31 Dec 30 Jun YoY YoY Ytd Ytd (CZK million, unaudited) 2020 2020 2021 rel. abs. rel. abs. Assets 1,246,614 1,167,131 1,318,604 5.8% 71,990 13.0% 151,473 Cash and current balances with central bank 27,510 23,547 24,279 -1
Slide 33: Capital & profitability indicators
FINANCIAL RATIOS CAPITAL & PROFITABILITY INDICATORS Adjusted for IFRIC 21 Reported linearisation* (year-to-date, IFRS 9) 30/06/2020 31/12/2020 30/06/2021 30/06/2020 30/06/2021 IFRS 9 IFRS 9 IFRS 9 IFRS 9 IFRS 9 Capital adequacy 21.9% 22.3% 23.3% Tier 1 ratio = Core Tier 1 ratio 21.3% 21.7% 22.7% Ris
Slide 34: 1H 2021 cost of risk structure
APPENDIX - COMPOSITION OF 1H21 COST OF RISK 1H 2021 COST OF RISK STRUCTURE Key components Contribution to 1H 2021 CoR Corporate NPL portfolio 8 bps Corporate performing portfolio (Stages 1 & 2) 10 bps Retail NPL portfolio 4 bps Retail performing portfolio (Stages 1 & 2) -1 bps IFRS9 models recalibra
Slide 35: Terminated loan moratorium portfolios
APPENDIX - LOAN MORATORIA TERMINATED LOAN MORATORIUM PORTFOLIOS Total moratorium o.w. defaulted % of defaulted o.w. non-defaulted % of non-defaulted CZK billion exposure exposure exposure exposure with DPD >10 exposure with DPD >10 Corporates 26.5 2.7 10.4% 0.3 1.3% Mortgages 28.7 1.6 5.6% 0.1 0.5%
Slide 36: Stage 2 exposure evolution
APPENDIX - STAGE 2 EXPOSURES STAGE 2 EXPOSURE EVOLUTION ▪ QoQ stable Stage 2 share at 6.3% Stage 2 KB Group • QoQ migrations between stages S1 and S2 7.2% 6.4% 6.4% 6,3% reflecting active loan portfolio monitoring activities 5.5% 5.5% with marginal net impact on risk classification 5.8% 5.9% 5.7% 5.
Slide 37: Lending with state Covid guarantee
LENDING WITH GUARANTEES LENDING WITH STATE COVID GUARANTEE As of 30 June 2021 Outstanding Signed exposure* GUARANTEED COVID LENDING No. of clients (CZK million) (CZK million) Covid II 938 4,013 3,478 Covid Prague 65 380 280 Covid III 2,298 15,675 14,576 Covid Plus 18 3,219 2,503 Total 3,319 23,287 2
Slide 38: Business performance of subsidiaries 1/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 1/2 1H 2020 1H 2021 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 8,318 17,271 108% Volume of total loans (gross, CZK million) 59,374 69,013 16% Volume of deposits (CZK million) 60,322
Slide 39: Business performance of subsidiaries 2/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 2/2 1H 2020 1H 2021 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 23,436 28,614 22% Volume of total financing (gross, CZK million) 7,011 8,546 22% Average number of FTEs 42 41 -3% Komerční p
Slide 40: Debt securities portfolio in the banking book
SECURITIES DEBT SECURITIES PORTFOLIO IN THE BANKING BOOK CZK billion 152.4 128.8 113.7 88.6 136.5 Slovakia 5.7 12.8 7.0 Poland 2.7 0.5 40.2 38.7 31/12/2020 30/06/2021 Debt securities at amortized cost Czech government bonds Debt securities at FV through OCI Foreign government bonds Bonds of fin.inst
Slide 41: Macroeconomic environment – Czechia
MACROECONOMIC ENVIRONMENT – CZECHIA Macroeconomic Indicators 2016 2017 2018 2019 2020 2021* 2022* Real GDP (%, average) 2.4 5.4 3.2 3.0 -5.8 4.2 5.3 Inflation (%, average) 0.7 2.5 2.1 2.8 3.2 2.8 2.4 Household consumption (%, average) 3.7 4.1 3.3 2.6 -7.0 1.4 6.5 Unemployment (%, av., ILO meth.) 4.0
Slide 42: Interest rates evolution
INTEREST RATES EVOLUTION For the period 1 Jan 2015 – 30 July 2021 KB GROUP AS OF 30 JUNE 2021│ 3 AUGUST 2021 │ 42
Slide 43: KB #1 listed Czech bank
KB #1 LISTED CZECH BANK Development of KB share price and PX index (1 January 2001 – 30 July 2021) Shareholder structure Free-float 39.6% Société Générale 60.4% • The number of shareholders comprised 57,851 corporate entities and private individuals. • Of the Bank’s total share capital of CZK 19,004
Slide 44: 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 2021│ 3 AUGUST 2021 │ 44