Komercni Banka, A.s. · PSECZ:KOMB
Komercni Banka, A.s — FY2007 Earnings Presentation
45 slides from Komercni Banka, A.s's earnings presentation, Feb 22, 2008
Slide 1: KB Group FY 2007 Financial Results
JJ Mois Année KB Group FY 2007 Financial Results (International Financial Reporting Standards) Prague – 22 February 2008
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 Business Highlights Consolidated Financial Results Loan Portfolio Quality and Development Appendix Komerční banka 2
Slide 4: Successful growth of the business performance and Group profitability
Successful growth of the business performance and Group profitability Consolidated net banking income of KB Group reached CZK 29,665 million, up 12.3% year on year Cost income ratio further improved to 45.7% Net operating income increased by 14.9% year on year Consolidated cost of risk at 37
Slide 5: 2007 – The year of innovations at Komerční banka Group
2007 – The year of innovations at Komerční banka Group More than 50 new or innovated products and services was introduced in 2007, among which: „Blue“ accounts – full-value banking packages for clients of Modrá pyramida Flexible Mortgage – allowing clients to increase their instalment by 100%, d
Slide 6: Main business achievements in 2007 – Retail
Main business achievements in 2007 As of 31 December 2007, year-on-year comparison KB Retail segment Sustained increase in number of individual clients, by 5% to 1,293,000 Successful acquisition of young clients 164,000 Child accounts (+12%); 158,000 Gaudeamus packages (+19%) Continuing develo
Slide 7: Main business achievements in 2007 – Corporate
Main business achievements in 2007 As of 31 December 2007, year-on-year comparison KB Group Corporate segment Total volume of loans to corporations grew by 17% Revenues from investment banking rose by 35% Newly established synergies with SGEF in real estate leasing and with ALD in car fleet ma
Slide 8: Main business achievements in 2007 – Subsidiaries
Main business achievements in 2007 As of 31 December 2007, year-on-year comparison KB Group Subsidiaries With more than 53,000 net additions total number of Penzijní fond KB clients exceeded 470,000. Excellent growth of consumer financing by ESSOX: volume of outstanding loans up 42% to CZK 5.8 b
Slide 9: 2007 – first year with full control over Modrá pyramida
2007 – first year with full control over Modrá pyramida Solid performance of Modrá pyramida‘ standalone business X Volume of loans rose 34% to CZK 33.0 billion X Client deposits up 7% to CZK 64.1 billion X Number of newly concluded savings contracts increased by 16% to 124,000 X Net profit up 15%
Slide 10: Group lending activities
Building saving loans Group lending activities Mortgages to individuals Consumer loans As of 31 December 2007, CZK billion Business loans Other loans + 20.5% Corporate loans grew by 16.9% YoY: 314.1 299.4 Small businesses (KB) +26.6% to CZK 15.5 billion 283.3 33 260.7 265.3 29.8 Corporations (KB+K
Slide 11: Group deposits
Building savings Group deposits KB individual deposits Clients’ pension assets As of 31 December 2007, CZK billion Business deposits Other deposits + 12.4% KB represents 83% of CZK 541 billion of total 540.8 491.2 507.4 508.5 depositary base, of which: 481.3 64.1 KB individuals deposits up 10% to
Slide 12: Strategic objectives for 2008
Strategic objectives for 2008 Retail segments Growth of client base through organic growth, expansion of distribution network and group synergies Leveraging potential of credit products in the under penetrated retail and small business segments Targeted cross-selling Development of alternati
Slide 13: Bank of the Year 2007
Bank of the Year 2007 Corporate Bank of the Building Society of the Year 2007 Year 2007 Komerční banka 12
Slide 14: Proposed distribution of 2007 Profit
KB Group Shareholders Equity Proposed distribution of 2007 Profit 2002 2003 2004 2005 2006 2007 Dividend per share (CZK) 40 200 100 250 150 180 EPS (CZK, consolidated) 237 228 235 234 242 295 Payout ratio (%) 16.8 87.7 42.5 106.6 62.5 61.0 Dividend yield* (%) 1.9 8.3 3.1 7.3 4.8 4.1 * Calculated on
Slide 15: Contents
Contents Business Highlights Consolidated Financial Results Loan Portfolio Quality and Development Appendix Komerční banka 14
Slide 16: Consolidated Financial Results
Financial Results of KB Group Consolidated Financial Results Profit and Loss Statement FY 2006 FY 2007 Change FY 2007 Change CZK million, unaudited restated* YoY reported YoY Net interest income 16,274 17,719 8.9% 18,674 14.7% Net fees & commissions 8,769 9,107 3.9% 9,283 5.9% Income from financial
Slide 17: Consolidated Financial Ratios
Financial Results of KB Group Consolidated Financial Ratios Key ratios and indicators 31 December 31 December Change 2006 2007 YoY Capital Adequacy (Basel I) 11.9% 10.1% T Tier 1 Ratio (Basel I) 10.3% 8.9% T Risk weighted assets (CZK billion) 310 383 23.4% Net Interest Margin (NII/Av. Interest Beari
Slide 18: NII increase resulting from strong volume growth
Net Interest Income NII increase resulting from strong volume growth CZK million, consolidated. Restatement based on same consolidation scope as in 2006 Group Net Interest Income Composition Contributions to Consolidated NII Other NII from deposits KB NII from loans NII from Investment Banking Group
Slide 19: Total fees growing with enlarged client base
Net Fees and Commissions Total fees growing with enlarged client base CZK million, consolidated. Restatement based on same consolidation scope as in 2006 Group Net Fees and Commissions Contributions to Consolidated F&C KB Non-FX FX clean payments FX other transactions Group companies 8,769 9,107 9,2
Slide 20: Profit from financial operations supported by clients' transactions
Financial Operations Income Profit from financial operations supported by clients’ transactions CZK million, consolidated. Restatement based on same consolidation scope as in 2006 Net Profit from Financial Operations Contributions to Consolidated NPFO Profit from FX operations Profit from Commodity
Slide 21: Total expenses increase driven by personnel costs
Total operating costs Total expenses increase driven by personnel costs CZK million, consolidated. Restatement based on same consolidation scope as in 2006 Total Group Expenses Composition Contributions to Consolidated Expenses Personnel costs General admin. costs Depreciation Personnel General admi
Slide 22: Cost of risk
Cost of risk Group cost of risk at 37 bp and for KB standalone at 31 bp CZK million. Restatement based on same consolidation scope as in 2006 Total Group Cost of Risk Composition Contributions to loan loss provisions Provisions for loan losses Provisions for other risk expenses KB Provisions for sec
Slide 23: KB Group Balance Sheet
KB Group Balance Sheet Assets Liabilities CZK billion, consolidated KB Group 661.8 Group companies 661.8 KB standalone 11.0 13.6 598.1 598.1 Cash and balances Amounts due 14.6 with central bank 15.0 to banks 203.7 Amounts due 208.7 from banks Amounts due 481.3 540.8 to customers Loans and advances 3
Slide 24: Development since the end of 2006
KB Group Shareholders Equity Development since the end of 2006 CZK million, consolidated Total shareholder’s equity Total shareholder’s equity as at 31 December 2006 +397 as at 31 December 2007 50,257 50,654 Shareholders’ equity 12/ 2006 1/1/2007 Increase Decrease 12/2007 Share capital 19,005 19,005
Slide 25: Contents
Contents Business Highlights Consolidated Financial Results Loan Portfolio Quality and Development Appendix Komerční banka 24
Slide 26: Overall quality of loan portfolio well under control
KB Group Loan Quality Overall quality of loan portfolio well under control CZK million, consolidated Gross client loans 314,080 Standard loans +20.5% Watch loans 260,704 Loans under special review • Share of standard loans in total portfolio increasing at 92% (90% as of December 2006) +22.7% 287,593
Slide 27: Improved provision coverage
KB Group Loan Coverage Improved provision coverage CZK million, consolidated Specific provisions and reserves +16% 9,623 Watch loans Loans under special review 8,299 793 657 +20.7% • Increase in overall specific provisions in line with portfolio expansion • LUSR provisioned on average at 69% (66% as
Slide 28: Contents
Contents Business Highlights Consolidated Financial Results Loan Portfolio Quality and Development Appendix Komerční banka 27
Slide 29: Business performance of subsidiaries
Business performance of subsidiaries FY 2006 FY 2007 YoY change Volume of new loans (CZK mil) 10,506 14,055 +34% Volume of total loans (gross, CZK mil) 24,657 32,950 +34% Volume of new saving contracts (target 26,586 34,967 +32% amount, CZK mil) MPSS Volume of savings (CZK mil) 59,678 64,051
Slide 30: Business performance of subsidiaries
Business performance of subsidiaries FY 2006 FY 2007 YoY change Factoring turnover (CZK mil) 17,075 18,144 +6% Factoring New contracts (number) 315 220 -30% KB Number of FTEs 39 41 +5% Total client loans (gross, CZK mil) 3,038 4,203 +38% Total client deposits (CZK mil) 2,424 3,427 +41% KBB
Slide 31: Subsidiary and associated undertakings results
Subsidiary and associated undertakings results As of 31 December 2007, CZK mil. Share of KB Net profit YoY Equity YoY Assets YoY ESSOX, s.r.o. (IFRS) 51% 74 +/- 2,161 +83% 7,453 +46% Factoring KB, a.s. * 100% 28 4% 1,365 +626% 4,490 +65% Komerční banka Bratislava, a.s. (IFRS) 100% 60 +13% 695 +6% 7,
Slide 32: Unconsolidated Financial Results
KB Financial Results Unconsolidated Financial Results Profit and Loss Statement FY 2006 FY 2007 Change CZK million, unaudited YoY Net banking income 24,631 26,226 6.5% Operating costs -11,590 -12,214 5.4% Net operating income 13,041 14,012 7.4% Cost of risk -1,619 -1,003 -38.0% Profit on subsidiarie
Slide 33: Loan portfolio growing in all client segments
KB Loan portfolio Loan portfolio growing in all client segments Volume of loans (unconsolidated, CZK billion, gross amount) Individuals Small businesses Corporates and Municipalities Top Corporations +19.5% 275.3 Other 264.5 249.5 230.4 233.5 93.7 34% 86.0 80.9 ■ Year-on-year growth of the loan port
Slide 34: Growth in deposits driven by current accounts
KB clients’ deposits Growth in deposits driven by current accounts Volume of primary client deposits (unconsolidated, CZK billion) Current Accounts incl. O/N Term and Savings Accounts Loans from Customers (excl. repo transactions) + 14.4% 428.0 426.3 451.9 394.9 397.6 ■ Depositary base increased by
Slide 35: Development since the end of 2006
KB Shareholders Equity Development since the end of 2006 CZK million, unconsolidated Total shareholder’s equity Total shareholder’s equity as at 31 December 2006 +582 as at 31 December 2007 48,654 49,236 Shareholders’ equity 12/2006 1/1/2007 Increase Decrease 12/2007 Share capital 19,005 19,005 - -
Slide 36: Number of clients and distribution network
Clients and Network Number of clients and distribution network As of 31 December 2007, year-on-year comparison Clients KB bank 1,577,000 clients - increase by 62,000 (+4%) • of which 1,293,000 are individual clients (+5%) MPSS 771,000 clients PFKB 470,000 clients Essox 172,000 active clients Net
Slide 37: Development of consolidated recurring profit
Development of consolidated recurring profit CZK million Profit and Loss without one-offs (pro-forma) FY 2006 FY 2007 Change Net banking income 26,158 28,469 8.8% Net interest income 16,011 17,719 10.7% Non-interest income 10,147 10,750 5.9% Operating costs - 12,606 - 13,264 5.2% 10,264 Personnel ex
Slide 38: Valuation of MPSS balance sheet
Revaluation of MPSS balance sheet Valuation of MPSS balance sheet Background • Preliminary goodwill on acquisition of Modrá pyramida at CZK 2,741 mil. • In accordance with IFRS 3 A&L valuation to be completed within 12 months after acquisition • Valuation based on detailed data on the contracts of M
Slide 39: CDO portfolio
CDO portfolio CDO portfolio As of 31 December 2007 ● KB’s divestment strategy of CDO portfolio, realized in 2004-2005, reduced significantly the invested amount. Since then, the continuing early CDO redemptions decreased the net book value amount to USD 11 mil., out of which more than 99% are the mo
Slide 40: KB consolidated group
KB consolidated group KOMERČNÍ BANKA PENSION BUILDING CORPORATE CONSUMER INSURANCE OTHERS INSURANCE SOCIETY SERVICES CREDIT Penzijní fond Modrá pyramida Factoring KB ESSOX Komerční KB st. spořitelna pojišťovna 100% 100% 100% 51% 49% KB Bratislava (Slovakia) 100% MPSS: PFKB: - Until 3Q 2006 equity me
Slide 41: Macroeconomic Environment
Macroeconomic Environment Czech Republic Macroeconomic indicators 2004 2005 2006 2007* 2008* Real GDP (%) + 4.6 + 6.4 + 6.4 + 6.6 +4.8 Inflation (%) + 2.8 + 1.9 + 2.5 + 2.8 +6.0 Households income (%) + 4.9 + 4.8 + 6.4 + 7.5 +5.9 M2 (%) + 4.4 + 8.0 + 9.9 + 13.2 +11.0 3M PRIBOR (%, average) 2.4 2.0 2.
Slide 42: Interest Rates Evolution
1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 28/12/01 28/03/02 28/06/02 28/09/02 28/12/02 Komerční banka 28/03/03 28/06/03 28/09/03 Interest Rates Evolution Pribor 3M 28/12/03 28/03/04 28/06/04 Pribor 6M 28/09/04 28/12/04 28/03/05 28/06/05 28/09/05 KB Reference Rate 28/12/05 28/03/06 28/06/06 28/
Slide 43: Development of KB's share price and PX Index
KB share price Development of KB’s share price and PX Index 4,800 2,100.0 CZK 4,300 1,900.0 1,700.0 3,800 1,500.0 3,300 1,300.0 2,800 1,100.0 2,300 900.0 1,800 700.0 1,300 500.0 800 300.0 01 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 0/ 1/ 4/ 7/ 0/ 1/ 4/ 7/ 0/ 1/ 4/ 7
Slide 44: Structure of Shareholders
KB Shareholders Structure of Shareholders Major shareholders of Komerční banka, a. s. as of 31 December 2007 Number of outstanding shares – 38,009,852 Free Float: 39.65% Société Générale S.A. 60.35% Others 30.63% Investors Bank & Trust Co.* 9.02% * Shares held on behalf of third parties Komerční ban
Slide 45: Investor Relations - Contacts
Contacts Investor Relations - Contacts JAKUB ČERNÝ Head of Investor Relations Phone: +420-222 432 156 Email: jakub_cerny@kb.cz OLGA NEVYHOŠTĚNÁ RENÁTA BUCHTOVÁ Investor Relations Investor Relations Phone: +420-222 432 734 Phone: +420-222 432 155 Email: olga_nevyhostena@kb.cz Email: renata_buchtova@k