Komercni Banka, a.s. · PSECZ:KOMB
Komercni Banka, a.s — FY2005 Earnings Presentation
39 slides from Komercni Banka, a.s's earnings presentation, Feb 28, 2006
Slide 1: Audited Financial Results as at 31 December 2005
JJ Mois Année Audited Financial Results as at 31 December 2005 (International Financial Reporting Standards) Prague - 28 February 2006
Slide 2: Contents
Contents n Strategy and Business Highlights n Financial Performance n Loan Portfolio Development n Appendix Komerční banka 1
Slide 3: Business environment: growing economy and under-penetration of retail market
Business environment Growing economy and under-penetration of the retail market 5.0% GDP (YoY growth) 4.4% 3.2% 2.6% • GDP growth is accelerating: on average the 1.5% economy grew by 5% in the 1-3Q 2005 2001 2002 2003 2004 1-3Q 2005 • Household loan growth remains high at Household loan growth 32% i
Slide 4: Successful implementation of the strategy
KB’s Strategy Successful implementation of the strategy • Strategy set in 2001 confirmed by KB’s business and financial performance • First part completed successfully: 4 Implementation of new business model 4 New approach to clients, development of the multichannel approach 4 Focus on the efficienc
Slide 5: Business organisation within KB – multichannel approach
KB’s Strategy Business organisation within KB – multichannel approach • 360 branches across the country; KB keeps expanding its network (25 new branches in 2005 and more than 20 planned in 2006) • KB is continuously focusing on direct banking channels. 793,000 clients (i.e. 54% of clients) actively
Slide 6: Main growth areas for coming years
KB’s Strategy Main growth areas for coming years • Increase of the client base ► Ongoing extending clients base. In 2005 the number of KB clients raised by 60,000 (i.e. 4%) ► Enlarging the distribution network and KB sales force ► Focusing on youngsters • Increase of the cross-selling ratio by ► Exp
Slide 7: Strong KB's performance: 8% growth in operating profit
Highlights of 2005 Strong KB’s performance: 8% growth in operating profit As of 31 December 2005, year-on-year comparison • Total revenues increased by 3% driven by NII • Total costs kept under tight control declined by 1.5%, supported by exceptional cost savings • Operating profit up 8% thanks to r
Slide 8: KB's strategic focus - strong growth in loan portfolio
Business highlights of 2005 KB’s strategic focus - strong growth in loan portfolio As of 31 December 2005, year-on-year comparison • Outstanding mortgages to individuals: + 39% to CZK 43.1 billion • Outstanding consumer loans: + 20% to CZK 12.6 billion • Outstanding loans on credit cards: +119% to C
Slide 9: Successful sales of alternative saving products
Business highlights of 2005 Successful sales of alternative saving products As of 31 December 2005, year-on-year comparison n Strong dynamics in sale of mutual funds: new sales volumes of CZK 18.9 billion (+ 189%) positively impacting the overall fee income of the Bank n Growth in sales of pension i
Slide 10: Ongoing growth of penetration ratios
Penetration of products Ongoing growth of penetration ratios 31. 12. 2004 31. 12. 2005 YoY Change Cross-selling ratio* Individuals 4.49 4.94 +10% Penetration ratio – Individuals** Packages 60.8 67.7 +11% Mortgages 2.6 3.0 +15% Consumer loans 9.8 11.3 +15% Payment cards 66.5 67.2 +1% Penetration rati
Slide 11: Contents
Contents n Strategy and Business Highlights n Financial Performance n Loan Portfolio Development n Appendix Komerční banka 10
Slide 12: Unconsolidated 2005 Financial Results
Unconsolidated 2005 Financial Results Unconsolidated Profit and Loss Statement FY 2004 FY 2005 Change CZK million, audited 05/04 Net banking income 22,717 23,409 +3.0% Operating costs -11,788 -11,611 -1.5% Net operating income 10,929 11,798 +8.0% Provisions for loan and investment losses 1,338 -349
Slide 13: NII driven by growing volumes
Net Interest Income NII driven by growing volumes CZK million, unconsolidated Net Interest Income Net Banking Income Other NII from loans + 3.0% 23,409 13,640 NII from deposits 22,717 12,406 NII from Investment Banking +10.9% 1,251 • NII growth driven especially by boosting 1,127 lending volumes esp
Slide 14: Growth limited by declining FX-fees and flat fees from daily banking
Net Fees and Commissions Growth limited by declining FX-fees and flat fees from daily banking CZK million, unconsolidated Net Fees and Commissions Net Banking Income Non-FX + 3.0% 23,409 8,703 8,718 FX clean payments 22,717 FX cash conversions • The growth in non-FX fees is mainly driven by service
Slide 15: KB trading profit sustained by clients' FX operations
Trading Profits and Other Income KB trading profit sustained by clients’ FX operations CZK million, unconsolidated Net Profit from Financial Operations Net Banking Income FX operations 23,409 Securities and security + 3.0% 1,145 derivatives 22,717 780 Interest and Commodity Derivatives 600 +1.6% 610
Slide 16: Total expenses down by 1.5%
Operating Costs Total expenses down by 1.5% CZK million, unconsolidated Personnel Costs Operating Costs • Positive impact of lower average 4,798 - 1.3% 4,737 headcount (-5.9% YoY) 11,788 - 1.5% 11,611 • However due to expanding business related activities the number of employees has been slightly in
Slide 17: 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 3,146 2,995 2,920 2,880 3,027 2,807 2,843 2,784 436 496 478 373 404 415 416 425 1,281 1,310 1,190 1,503 1,202 1,355
Slide 18: Cost of risk
Cost of risk CZK million, unconsolidated Cost of risk CZK million, unconsolidated General reserve release Provisions for loan losses Impairment of securities Provisions for other risk expenses 1,338 Comments -349 ▪ Net provision for loan losses posted at CZK -675 million to be release compared to CZ
Slide 19: Net profit on subsidiaries and associates before tax; Income Tax
Profit from subsidiaries, Income tax Net profit on subsidiaries and associates before tax CZK million, unconsolidated Comments 889 • The 2005 figure is affected by: -61.7% - the first instalment from the IKS sale with a gain of CZK 56 million - the gain from the disposal of 51% stake in KP worth CZK
Slide 20: Recurring profit without one-off effects continues to rise
Recurring profit Recurring profit without one-off effects continues to rise CZK million, unconsolidated Net profit for the year 8,763 9,262 9,299 9,148 7,416 + 5.8% + 3.6% 7,009 RECURRING 6,768 6,320 + 7.1% NET PROFIT General reserve General reserve General reserve Reserve release release release re
Slide 21: Balance Sheet
Balance Sheet Assets Liabilities CZK million, unconsolidated 493,738 Change 493,738 Change 448,294 9,231 448,294 - 7.9% 31,526 + 70.0% Cash and balances 10,025 Amounts due 18,548 with central bank to banks Amounts due from 231,361 245,953 + 6.3% banks Amounts due 358,825 370,058 + 3.1% to customers
Slide 22: Shareholders Equity
Shareholders Equity Development since the end of 2004 CZK million, unconsolidated Total shareholder’s equity Total shareholder’s equity as at 31 December 2004: + 6,736 as at 31 December 2005: 43,578 50,314 Shareholders’ equity 31. 12. 2004 1. 1. 2005 Increase Decrease 31. 12. 2005 Share capital 19,0
Slide 23: Contents
Contents n Strategy and Business Highlights n Financial Performance n Loan Portfolio Development n Appendix Komerční banka 22
Slide 24: Loan portfolio quality remains under control
Client loan portfolio Loan portfolio quality remains under control CZK million, unconsolidated Client loans, On-balance sheet Specific provisions Gross amount + 15.9% 6,200 +19.1% 191,307 5,348 160,679 Total watch loans - 6.0% 486 517 Total loans under 4,831 + 18.3% 5,714 special review Standard loa
Slide 25: CDO portfolio: restructuring of the portfolio finalized
CDO portfolio Restructuring of the portfolio finalized As of 31 December 2005 ● CDO portfolio purchased by KB in 2000 consisted of only 14% of below investment-grade assets. From 2002, with the deterioration of underlying assets, weight of these assets more than doubled to reach 32% in 2004. ● In 20
Slide 26: Contents
Contents n Strategy and Business Highlights n Financial Performance n Loan Portfolio Development n Appendix Komerční banka 25
Slide 27: Financial Results of KB Group
Financial Results of KB Group Consolidated Financial Results and Ratios Profit and Loss Statement FY 2004 FY 2005 Change CZK million, unaudited 05/04 Net interest income 13,264 14,660 +10.5% Net fees & commissions 8,936 8,736 -2.2% Income from financial operations 1,414 1,238 -12.4% Other income 138
Slide 28: Subsidiary and associated undertakings results
Financial Results of KB Group Subsidiary and associated undertakings results As at 31 December 2005, CZK mil., CAS/SAS/IFRS Share of KB Profit after tax Equity Assets ESSOX, s.r.o. (IFRS) 51% -48 49 2,500 Factoring KB, a.s. (CAS) 100% 18 162 4,441 Komercni Finance, B.V. 100% 2 7 8 Komerční banka Bra
Slide 29: Large increase in the number of points of sale
KB Clients and Network Large increase in the number of points of sale As of 31 December 2005, year-on-year comparison § 1,467,000 clients* - 1,186,000 individuals and 281,000 corporates - YonY increase in number of clients by 60,000 (+4%) § Network - 360 points of sale for retail clients - 37 busine
Slide 30: 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 191.3 + 19.0% 185.1 173.6 164.9 55.7 160.7 51.6 29% ■ Year-on-year growth of the loan portfolio 48.1 by 19.0% 43.9 41.6 ■ Total mortgage loans amounted to CZK 46.8
Slide 31: Structural changes in deposits continue
Clients’ deposits Structural changes in deposits continue Current Accounts incl. O/N Volume of primary client deposits Term and Savings Accounts CZK billion Loans from Customers (excl. repo transactions) + 3.3% 363.1 353.0 356.7 ■ Slight increase of depositary base by 351.6 345.9 3.3% year-on-year ■
Slide 32: Sales of key products
Products for Individuals and Small Businesses Sales of key products Financial Packages 31. 12. 2004 31. 12. 2005 YoY Change PACKAGES FOR 614,836 696,438 + 13% INDIVIDUALS packages packages GAUDEAMUS 101,415 116,324 + 15% package for young clients packages packages 94,821 127,371 + 34% CHILD ACCOUNT
Slide 33: Growing card business
Payment cards Growing card business 31. 12. 2004 31. 12. 2005 YoY Change Debit cards - active 1,155,342 1,244,388 +8% Credit cards – active 66,096 124,720 +89% o/w to entrepreneurs - 24,541 - Number of POS (points of sales using 12,717 15,527 22% electronic device) 1-4Q 2004 1-4 Q 2005 Number of tra
Slide 34: Co-operation within KB/SG Group and Strategic Partnerships
Cross-selling activities Co-operation within KB/SG Group and Strategic Partnerships Provided in 1-4Q 2004 1-4Q 2005 Change 05/04 co-operation with: Life insurance Vital (number of sold policies through KB) Komerční pojišťovna 48,123 51,259 +6.5% Non-life insurance Allianz (number of sold policies th
Slide 35: Macroeconomic Environment: Czech Republic
Macroeconomic Environment Czech Republic Macroeconomic indicators 2003 2004 2005* 2006* 2007* GDP (%) + 3.2 + 4.7 + 4.8 + 4.4 + 4.4 Inflation (%) + 0.1 + 2.8 + 1.9** + 2.5 + 2.5 Households income (%) + 4.8 + 4.9 + 5.0 + 5.0 + 5.5 M2 (%) + 6.9 + 4.4 + 8.2** + 6.0 + 6.5 3M PRIBOR (%) 2.3 2.4 2.0** 2.4
Slide 36: Interest Rates Evolution
Market Interest Rates Interest Rates Evolution 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 01 2 2 2 02 3 3 3 03 4 4 4 04 5 5 5 05 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 2. 2. 2. 2. 2. .3 .6 .9 .3 .6 .9 .3 .6 .9 .3 .6 .9 .1 .1 .1 .1 .1 31 30 30 31 30 30 31 30 30 31 30 30 31 31 31 31 31 Pribor 3M Pri
Slide 37: Development of KB's share price and Index PX50
KB Share price Development of KB’s share price and Index PX50 CZK 3 900 1 600 3 700 1 500 3 500 1 400 3 300 1 300 1 200 3 100 1 100 2 900 1 000 2 700 900 2 500 800 2 300 700 2 100 600 1 900 500 1 700 400 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.
Slide 38: Structure of Shareholders
KB Shareholders Structure of Shareholders Major shareholders of Komerční banka, a. s. as at 31 December 2005 Number of shares outstanding - 38 million Free Float: 39.65% Others Société Générale S.A. 27.01% 60.35% Chase Nominees Ltd.* 3.11% The Bank of New York ADR Dept. 4.39% Investors Bank & Trust
Slide 39: 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