Komercni Banka, a.s. · PSECZ:KOMB
Komercni Banka, a.s — H1 2006 Earnings Presentation
42 slides from Komercni Banka, a.s's earnings presentation, Aug 3, 2006
Slide 1: Komerční Banka's Results as at 30 June 2006
JJ Mois Année Komerční Banka’s Results as at 30 June 2006 (International Financial Reporting Standards) Prague - 3 August 2006
Slide 2: Contents
Contents n Strategy and Business Highlights n Financial Performance n Loan Portfolio Development n Acquisition of Modrá pyramida stavební spořitelna n Appendix Komerční banka 1
Slide 3: Highlights of 1H 2006
Highlights of 1H 2006 Strong earnings growth and strategic expansion As of 30 June 2006, year-on-year comparison • In July, KB signed a contract for acquiring up to 50% in building society Modrá pyramida stavební spořitelna from BHW Holding for EUR 120 million, thus rising its stake from the current
Slide 4: Business highlights of 1H 2006: Multichannel approach
Business highlights of 1H 2006 Multichannel approach - strong growth of direct banking As of 30 June 2006, year-on-year comparison n Number of total clients increased by 49,000 to 1.48 million year on year, mainly as a result of individual clients’ acquisition n KB network comprises 360 points of sa
Slide 5: Strategic Target - Expansion of KB Loan Portfolio
Business highlights of 1H 2006 Strategic Target - Expansion of KB Loan Portfolio As of 30 June 2006, year-on-year comparison • Outstanding mortgages to individuals: + 35% to CZK 49.3 billion • Outstanding consumer loans: + 20% to CZK 14 billion • Outstanding loans on credit cards: + 91% to CZK 2.4 b
Slide 6: Continuous emphasis on cross-selling activities
Business highlights of 1H 2006 Continuous emphasis on cross-selling activities n Improvement in the cross-selling ratio for individuals to 5.07 from 4.77 n Increase in sales of life insurance products: premium written up 8% year-on-year n Successful partnership with Allianz: 42% year-on-year increas
Slide 7: Corporate and Investment banking
Business highlights of 1H 2006 Corporate and Investment banking n KB participated in several important deals in the 1H 2006: 4 Granting up to CZK 2 bil. (€ 68 mil.) to the Czech leading construction company Metrostav for participating in the biggest Czech Republic’s construction tender ever announce
Slide 8: Contents
Contents n Strategy and Business Highlights n Financial Performance n Loan Portfolio Development n Acquisition of Modrá pyramida stavební spořitelna n Appendix Komerční banka 7
Slide 9: Unconsolidated Financial Results
Unconsolidated Financial Results Unconsolidated Profit and Loss Statement 1H 2005 1H 2006 Change CZK million, unaudited 06/05 Net banking income 11,512 12,386 + 7.6% Operating costs - 5,677 - 5,564 - 2.0% Net operating income 5,834 6,822 + 16.9% Cost of risk - 526 - 785 + 49.0% Profit on subsidiarie
Slide 10: Net Interest Income
Net Interest Income NII growth fuelled mainly by loan growth CZK million, unconsolidated Net Interest Income Net Banking Income Other NII from loans + 7.6% 12,386 7,376 NII from deposits 6,671 NII from Investment Banking 11,512 +35.5% 825 609 • Dynamic growth in NII from loans thanks to rising credi
Slide 11: Net Fees and Commissions
Net Fees and Commissions Total fees slightly increased CZK million, unconsolidated Net Banking Income Net Fees and Commissions Non-FX + 7.6% 12,386 4,286 4,328 FX clean payments FX cash conversions 11,512 • The growth in non-FX fees is mainly driven by fees from cross- selling (with fees received fr
Slide 12: Trading Profits and Other Income
Trading Profits and Other Income KB trading profit up 54% CZK million, unconsolidated Net Profit from Financial Operations Net Banking Income FX operations + 53.8% 607 Securities and security + 7.6% 12,386 394 derivatives Interest and Commodity 11,512 Derivatives 351 - 20.1% 281 • Net result up YoY
Slide 13: Operating Costs
Operating Costs Total expenses declined 2%, supported by one-offs CZK million, unconsolidated Operating Costs Personnel Costs 2,308 + 2.3% 2,360 5,677 - 2.0% 5,564 • Due to expanding business related activities the average number of employees is rising (+2% YoY) • In 1Q positive impact from the rele
Slide 14: Operating costs Q-on-Q development
Operating Costs Operating costs Q-on-Q development CZK million, unconsolidated Depreciation, impairment and disposal of fixed assets General administrative expenses Personnel expenses 3,022 2,896 2,913 2,894 2,764 2,668 415 478 370 416 425 394 1,182 1,348 1,251 1,341 1,226 1,215 1,157 1,150 1,227 1,
Slide 15: Cost of risk, Profit from subsidiaries
Cost of risk, Profit from subsidiaries CZK million, unconsolidated Cost of Risk Provisions for loan losses Impairment of securities Comments Provisions for other risk expenses -526 + 49.0% -785 • Higher loan loss provisions mainly reflecting growing share of mass retail activities. -296 + 88.3% -557
Slide 16: Balance Sheet
Balance Sheet Assets Liabilities CZK million, unconsolidated YoY YoY Change Change 493,738 493,738 472,982 490,666 + 3.7% 490,666 + 3.7% 472,982 Cash and balances 9,231 11,650 - 1.1% Amounts due 31,526 22,163 + 5.9% 11,777 with central bank to banks 20,925 Amounts due from 235,295 245,953 214,391 -
Slide 17: Shareholders Equity: Development since the end of 2005
Shareholders Equity Development since the end of 2005 CZK million, unconsolidated Total shareholder’s equity Total shareholder’s equity as at 31 December 2005: - 7,992 as at 30 June 2006: 50,514 42,522 Shareholders’ equity 31. 12. 2005 1. 1. 2006 Increase Decrease 30. 6. 2006 Share capital 19,005 19
Slide 18: Contents
Contents n Strategy and Business Highlights n Financial Performance n Loan Portfolio Development n Acquisition of Modrá pyramida stavební spořitelna n Appendix Komerční banka 17
Slide 19: Overall quality of loan portfolio remained satisfactory
Client loan portfolio Overall quality of loan portfolio remained satisfactory CZK million, unconsolidated Client loans, On-balance sheet Gross amount + 21.1% 210,344 YoY change 191,307 173,649 165,578 183,590 +24.9% Standard loans 146,950 Watch loans 17,233 16,811 + 0.5% 17,319 LUSR* 9,466 8,918 9,4
Slide 20: Improved provision coverage
Client loan portfolio Improved provision coverage CZK million, unconsolidated Specific provisions + 15.6% YoY change 6,200 6,788 5,872 Total watch loans 486 575 + 10.4% 521 Total loans under 5,714 6,213 5,351 special review + 16.1% 30. 6. 2005 31. 12. 2005 30. 6. 2006 • Increase in specific provisio
Slide 21: Contents
Contents n Strategy and Business Highlights n Financial Performance n Loan Portfolio Development n Acquisition of Modrá pyramida stavební spořitelna n Appendix Komerční banka 20
Slide 22: Significant Acquisition on the Czech Market
Acquisition of Modrá pyramida Significant Acquisition on the Czech Market n On 20 July 2006, KB signed an agreement with BHW Holding AG on acquisition of up to an additional 50% of Modrá pyramida building society (MPSS). Under all circumstances, KB shall become majority shareholder with at least 80%
Slide 23: Business model of MPSS
Acquisition of Modrá pyramida Business model of MPSS n MPSS was established as a joint venture of Komerčni banka, BHW and Česká pojišťovna under the name Vseobecná stavebni sporitelna, a. s. in 1993. The company is licensed by the Czech National Bank to provide specialised products and services conn
Slide 24: MPSS ranks among the largest and most rapidly growing building societies
Acquisition of Modrá pyramida MPSS ranks among the largest and most rapidly growing building societies in ČR n MPSS is the third largest and most dynamic building society company on the Czech market as measured by volume of new saving contracts concluded in 2005. In number of clients, MPSS increased
Slide 25: MPSS - Key Financial and Business Data
Acquisition of Modrá pyramida MPSS - Key Financial and Business Data CAS Company Data 30.6.2006 31.12.2005 YTD (unaudited) (audited) Change n Total equity (CZK mil): 1,824 1,605 +14% n Volume of deposits (CZK mil): 54,529 54,728 +0% n Volumes of loans (CZK mil): 21,376 19,523 +9% 30.6.2006 30.6.2005
Slide 26: MPSS complementary to KB Business Model
Acquisition of Modrá pyramida MPSS complementary to KB Business Model This transaction is in line with KB’s strategic focus on continuing enhancement of its business activities and revenues’ generation and represents a significant strategic step in terms of expansion on the Czech market. n Acquisiti
Slide 27: Future Synergies from the Acquisition
Acquisition of Modrá pyramida Future Synergies from the Acquisition The main aim of the transaction is the revenues’ enhancement for KB. n Strong revenue synergies as a result of: 4 Continuous strong growth of MPSS‘ business in the Czech market; 4 Significant cross-selling potential from an increase
Slide 28: Contents
Contents n Strategy and Business Highlights n Financial Performance n Loan Portfolio Development n Acquisition of Modrá pyramida stavební spořitelna n Appendix Komerční banka 27
Slide 29: Financial Results of KB Group
Financial Results of KB Group Consolidated Financial Results and Ratios Profit and Loss Statement 1H 2005 1H 2006 Change CZK million, unaudited 06/05 Net interest income 7,193 7,854 +9.2% Net fees & commissions 4,331 4,321 -0.2% Income from financial operations 494 733 +48.4% Other income -49 37 +/-
Slide 30: Subsidiary and associated undertakings results
Financial Results of KB Group Subsidiary and associated undertakings results As at 30 June 2006, CZK mil., CAS/IFRS Share of KB Profit after tax Equity Assets ESSOX, s.r.o. (IFRS) 51% -27 22 3,224 Factoring KB, a.s. (CAS) 100% 16 178 4,919 Komerční banka Bratislava, a.s. (IFRS) 100% 25 565 4,450 Pen
Slide 31: KB Clients and Network
KB Clients and Network Growth in usage of direct banking channels continues As of 30 June 2006, year-on-year comparison § 1,484,000 clients - increase by 49,000 (+3%) - of which 1,203,000 are individual clients (+4%) § Network - 360 points of sale for retail clients - including 35 business centres f
Slide 32: Loan portfolio growing in all client segments
Loan portfolio Loan portfolio growing in all client segments Individuals SME Volume of loans Corporates CZK billion, Gross amount Other +21.1% 210.3 200.4 191.3 185.1 173.6 55.7 58.6 63.2 30% 51.6 ■ Year-on-year growth of the loan portfolio 48.1 by 21.1% ■ Total mortgage loans amounted to CZK 59.0 2
Slide 33: Growth in deposits driven by current accounts
Clients’ deposits Growth in deposits driven by current accounts Current Accounts incl. O/N Term and Savings Accounts Volume of primary client deposits Loans from Customers (excl. repo CZK billion transactions) + 5.1% 363.1 371.1 356.7 367.3 ■ Depositary base increased by 5.1% 353.0 year-on-year ■ Vo
Slide 34: Ongoing growth of penetration ratios
Penetration of products Ongoing growth of penetration ratios 30. 6. 2005 30. 6. 2006 YoY Change Cross-selling ratio* Individuals 4.77 5.07 +6% Penetration ratio – Individuals** Mortgages 2.7 3.4 +26% Consumer loans 10.5 12.1 +15% Credit cards 6.7 9.3 +39% Life insurance 8.1 10.0 +23% Penetration rat
Slide 35: Sales of key products
Products for Individuals and Small Businesses Sales of key products Financial Packages 30. 6. 2005 30. 6. 2006 YoY Change PACKAGES FOR 666,329 724,988 + 9% INDIVIDUALS packages packages GAUDEAMUS 108,503 115,240 + 6% package for young clients packages packages 113,116 138,404 + 22% CHILD ACCOUNT acc
Slide 36: Further expansion of card business
Payment cards Further expansion of card business 30. 6. 2005 30. 6. 2006 YoY Change Debit cards - active 1,206,697 1,271,457 +5% Credit cards – active 93,062 149,263 +60% o/w to entrepreneurs 12,097 34,356 +184% Number of POS (points of sales using 14,051 15,715 12% electronic device) 1H 2005 1H 200
Slide 37: Co-operation within KB/SG Group and Strategic Partnerships
Cross-selling activities Co-operation within KB/SG Group and Strategic Partnerships Provided in 1H 2005 1H 2006 Change 06/05 co-operation with: Life insurance Vital (number of sold policies through KB) Komerční pojišťovna 25,992 21,812 -16% Non-life insurance Allianz (number of sold policies through
Slide 38: Macroeconomic Environment: Czech Republic
Macroeconomic Environment Czech Republic Macroeconomic indicators 2003 2004 2005 2006* 2007* Real GDP (%) + 3.6 + 4.2 + 6.1 + 5.8 + 4.8 Inflation (%) + 0.1 + 2.8 + 1.9 + 2.8 + 2.5 Households income (%) + 4.8 + 4.9 + 4.8 + 5.0 + 5.0 M2 (%) + 6.9 + 4.4 + 8.2 + 8.0 + 7.5 3M PRIBOR (%) 2.3 2.4 2.0 2.4 2
Slide 39: Market Interest Rates
Market Interest Rates Interest Rates Evolution 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 01 02 03 04 05 02 02 02 03 03 03 04 04 04 05 05 05 06 06 2. 2. 2. 2. 2. . . . . . . . . . . . . . . .3 .6 .9 .3 .6 .9 .3 .6 .9 .3 .6 .9 .3 .6 .1 .1 .1 .1 .1 31 30 30 31 30 30 31 30 30 31 30 30 31 30 31 31
Slide 40: Development of KB's share price and PX Index
KB Share price Development of KB’s share price and PX Index CZK 3 950 1 650 3 750 1 550 3 550 1 450 1 350 3 350 1 250 3 150 1 150 2 950 1 050 2 750 950 2 550 850 2 350 750 2 150 650 1 950 550 1 750 450 31.12.02 31.3.03 30.6.03 30.9.03 31.12.03 31.3.04 30.6.04 30.9.04 31.12.04 31.3.05 30.6.05 30.9.05
Slide 41: Structure of Shareholders
KB Shareholders Structure of Shareholders Major shareholders of Komerční banka, a. s. as at 26 May 2006 Number of shares outstanding – 38,009,852 Free Float: 39.65% Société Générale S.A. 60.35% Others 33.78% Investors Bank & Trust Co.* 5.87% * Shares held on behalf of third parties Komerční banka 40
Slide 42: Investor Relations - Contacts
Contacts Investor Relations - Contacts ILONA KATZOVÁ Head of Investor Relations Phone: +420-222 432 156 Email: ilona_katzova@kb.cz MARTIN SKOUMAL EMILIA ZAMPIERI Investor Relations Investor Relations Phone: +420-222 432 155 Phone: +420-222 432 734 Email: martin_skoumal@kb.cz Email: emilia_zampieri@k