Komercni Banka, a.s. · PSECZ:KOMB
Komercni Banka, a.s — The Morgan Stanley European Financials Conference 2012
50 slides from Komercni Banka, a.s's conference presentation, Mar 29, 2012
Slide 1: Komerční Banka Group – Morgan Stanley European Financials Conference
Komerční Banka Group The Morgan Stanley European Financials Conference London 27th – 29th March 2012
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 Introduction and Strategy Macroeconomic Update Business Update Consolidated Financial Results Loan Portfolio Quality and Cost of Risk Appendix 3 KB Group – The Morgan Stanley European Financials Conference, London, 27th – 29th March 2012
Slide 4: Strong position on a healthy market
Profile of Komerční banka Strong position on a healthy market Valuable - One of Top 3 banks on the Czech Republic‘s healthy and profitable banking market - A leading bank for corporations with a strong presence on the retail market franchise - CZK 142.0 billion (GBP 4.8 billion)* market capitalizati
Slide 5: Strong position on the Czech market
KB market position Strong position on the Czech market Bank assets Bank client loans Mortgages to individuals CS CS CS CSOB CSOB (Erste), (Erste), (Erste), (KBC), (KBC), 24.7% 21.6% 20.9% 18.3% CSOB 25.3% (KBC), 28.7% Unicredit, Unicredit, 6.3% 8.4% KB, Raiffeisen KB, Raiffeisen 22.9% KB, 6.6% 18.6%
Slide 6: Resilient profitability through the cycle
Summary of consolidated financial results 2006 – 2011 Resilient profitability through the cycle CZK million, IFRS 2006 2007 2008 2009 2010 2011 Net Banking Income 26,421 29,670 32,927 32,195 32,662 32,764 Total Operating Costs -12,400 -13,629 -14,024 -13,521 -12,942 -13,490 Attributable Net Profit /
Slide 7: Gradual strengthening of retail banking activities - lending
KB loans development 2003 – 2011 Gradual strengthening of retail banking activities - lending KB Group Loans as of 31 December 2003 KB Group Loans as of 31 December 2011 17% 11% 7% 5% 49% 28% 71% Mortgages to individuals CZK 137.2 billion Consumer loans 6% Small businesses 6% Business Loans Building
Slide 8: Gradual strengthening of retail banking activities - deposits
KB deposits development 2003 – 2011 Gradual strengthening of retail banking activities - deposits KB Group Deposits as of 31 December 2003 KB Group Deposits as of 31 December 2011 29% 36% 42% 33% 3% 19% 13% Individuals CZK 353.6 billion Pension fund Small Businesses Corporations 20% 5% Individuals B
Slide 9: Priorities for 2012
KB strategy Priorities for 2012 Delivering upgraded direct channels and improvements in the branch network, development of advisory competences and tools in the distribution network with a common goal of reinforcing client satisfaction and loyalty Development of lending activities, with primary focu
Slide 10: Agenda
Agenda Introduction and Strategy Macroeconomic Update Business Update Consolidated Financial Results Loan Portfolio Quality and Cost of Risk Appendix 10 KB Group – The Morgan Stanley European Financials Conference, London, 27th – 29th March 2012
Slide 11: External factors drag down the Czech economy
Czech economy External factors drag down the Czech economy Industrial production resilient in 2011 (+6.9% Real GDP development (%) YoY), average unemployment down by 0.4 p.p. (8.5%), both to be affected by declining orders in 2.9 2.6 1.7 0.1 1.3 2012* Government 2011 deficit 3.7%* of GDP below -4.5
Slide 12: Balanced position
Czech economy Balanced position Public debt (% of GDP) Current account (% of GDP) 3.0 0.0 40.8 -3.0 34.4 37.6 27.9 28.7 -6.0 -9.0 2008 2009 2010 2011 2007 2008 2009 2010 2011* Services Income Current account Public finance deficit (% of GDP) Unemployment (%, average) -0.7 -2.2 -3.7 -4.8 -5.8 9.0 8.5
Slide 13: Healthy and profitable market
Czech banking system Healthy and profitable market Solvency indicators (%, Basel II) Return on Tier 1 capital (%) 15.5 15.7 14.1 14.1 14.6 12.3 12.7 11.6 11.7 10.0 25.8 24.5 21.7 21.9 20.5 2007 2008 2009 2010 9M 2011 2007 2008 2009 2010 9M 2011 Total Capital adequacy Tier 1 ratio Loan-to-Deposit rat
Slide 14: Relatively low penetration of lending
Czech economy Relatively low penetration of lending Loans to households (% of GDP) Loans to non-fin. corporations (% of GDP) 56.4 50.8 29.1 25.1 Eurozone Czech Republic Eurozone Czech Republic Mortgages (% of GDP) Consumer loans (% of GDP)* 40.0 16.5 20.2 8.9 Eurozone Czech Republic Eurozone Czech R
Slide 15: Agenda
Agenda Introduction and Strategy Macroeconomic Update Business Update Consolidated Financial Results Loan Portfolio Quality and Cost of Risk Appendix 15 KB Group – The Morgan Stanley European Financials Conference, London, 27th – 29th March 2012
Slide 16: Improved dynamics of deposit growth
Group deposits CZK billion By Customers 546.8 551.1 560.7 535.3 538.1 536.1 70.9 Improved dynamics of deposit 69.0 69.0 69.2 70.4 69.7 growth 151.3 153.7 154.2 156.3 156.9 159.9 28.2 28.8 29.0 29.7 29.9 30.4 YoY group deposits increased by 4.2%, QoQ up by 1.7% 280.7 281.1 281.9 291.1 295.1 278.8 Vol
Slide 17: Dynamic growth of lending
Group lending activities CZK billion 450.5 Dynamic growth of lending 422.3 435.1 389.0 399.7 398.2 51.4 50.6 51.3 48.7 49.7 50.0 119.1 124.1 Gross loans rose 12.7% YoY, 3.5% QoQ 115.7 106.4 109.3 112.0 (adjusted for SGEF acquisition up by 10.0% YoY, 28.4 28.2 28.3 28.3 4.1% QoQ) 28.3 28.1 Business l
Slide 18: Agenda
Agenda Introduction and Strategy Macroeconomic Update Business Update Consolidated Financial Results Loan Portfolio Quality and Cost of Risk Appendix 18 KB Group – The Morgan Stanley European Financials Conference, London, 27th – 29th March 2012
Slide 19: Consolidated financial results: Profit and Loss Statement
Consolidated financial results Change Change Profit and Loss Statement FY 2010 FY 2011 FY 2011 YoY YoY (CZK million, unaudited) Pro forma Pro forma Net interest income 21,431 22,190 21,848 3.5% 1.9% Net fees & commissions 7,725 7,305 7,286 -5.4% -5.7% Income from financial operations 3,135 3,157 3,1
Slide 20: Recurring financial results: Recurring P&L
Recurring financial results Change Change Recurring P&L FY 2010 FY 2010 FY 2011 FY 2011 YoY YoY (CZK million, unaudited) Reported Recurring Reported Recurring Reported Recurring Net interest income 21,431 21,330 22,190 21,803 3.5% 2.2% Net fees & commissions 7,725 7,725 7,305 7,446 -5.4% -3.6% Incom
Slide 21: Consolidated financial results: Balance Sheet
Consolidated financial results 31 Dec 31 Dec 31 Dec Change Change Balance Sheet 2010 2011 2011 YtD YtD (CZK million, unaudited) Pro forma Pro forma Assets 698,014 754,810 744,188 8.1% 6.6% Cash and balances with central bank 13,689 16,980 16,980 24.0% 24.0% Amounts due from banks 112,179 101,393 100
Slide 22: Consolidated financial ratios: Key ratios and indicators
Consolidated financial ratios 31 Dec 30 Sep 31 Dec 31 Dec Change Change Key ratios and indicators 2010 2011 2011 2011 YoY YoY (year-to-date) Pro forma Pro forma Capital adequacy 15.3% 16.0% 14.6% 15.1% Tier 1 ratio 14.0% 14.7% 13.4% 13.8% Total capital requirement (CZK billion) 27.5 28.4 30.4 29.0 1
Slide 23: Growth in interest income driven by business volumes
Net interest income Growth in interest income driven by business volumes 5,569 5,579 5,671 5,273 5,449 5,372 431 559 495 527 NII in FY 2011 up by 3.5% YoY (+1.9% adjusted for 450 498 SGEF acquisition). 4Q up 1.6% QoQ 2,122 2,198 2,278 2,296 2,021 2,078 NII at subsidiaries – ESSOX +6%, Modrá pyramida
Slide 24: Income impacted by decreasing prices and higher commissions paid
Net fees and commissions Income impacted by decreasing prices and higher commissions paid 2,028 1,931 1,866 1,882 Fee income in FY 2011 down 5.4% YoY (-5.7% 1,837 167 211 1,720 adjusted for SGEF acquisition). 4Q down 6.4% QoQ 193 160 183 400 367 177 416 396 386 200 Maintenance fees – lower income af
Slide 25: Improved results in the second half
Net profit from financial operations Improved results in the second half 957 864 804 816 Net profit from financial operations in FY 2011 713 672 400 increased by 0.7% YoY (-1.1% adjusted for SGEF 488 434 424 acquisition). 4Q result up 17.3% QoQ 394 344 Penzijní fond KB realised gains totalling CZK 1
Slide 26: Temporarily faster pace of costs development in 2011
Operating costs Temporarily faster pace of costs development in 2011 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 OPEX in FY 2011 rose by 6.5% YoY (5.4% adjusted for SGEF acquisition). OPEX in 4Q up 12.3% QoQ. Comparative base of 2010 affected by positive one- -1,491 -1,613 -1,605 -1,653 -1,682 -
Slide 27: Shareholders' equity
Shareholders‘ equity Development year-to-date Total shareholders‘ equity Total shareholders‘ equity +5,772 as at 31 December 2010 as at 31 December 2011 Shareholders' equity 31/12/2010 1/1/2011 Increase Decrease 31/12/2011 Share capital 19,005 19,005 19,005 Capital and reserve funds 36,173 49,503 -1
Slide 28: Maintaining safe capital base
Proposed distribution of 2011 profit Maintaining safe capital base Capital adequacy development analysis (Total CAD, CNB methodology, Basel II) Board of Directors proposal is subject to approval -70 bps by KB‘s Supervisory Board and by the Annual -20 bps -50 bps General Meeting of the bank -158 bps
Slide 29: Agenda
Agenda Introduction and Strategy Macroeconomic Update Business Update Consolidated Financial Results Loan Portfolio Quality and Cost of Risk Appendix 29 KB Group – The Morgan Stanley European Financials Conference, London, 27th – 29th March 2012
Slide 30: Improving loan portfolio quality
Loan quality Improving loan portfolio quality Gross lending CZK billion 435.1 450.5 Loan exposure +12.7% YoY (incl. SGEF 422.3 389.0 399.7 398.2 acquisition), +3.5% QoQ driven by organic growth mainly thanks to corporate loans and 394.7 410.2 mortgages to individuals 349.2 360.9 359.4 381.1 Share of
Slide 31: Cost of risk negatively affected by Greek government bonds impairment
Cost of risk Cost of risk negatively affected by Greek government bonds impairment 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 133 181 175 2011 cost of risk at CZK 7.3 billion compared 83 80 55 52 43 63 to CZK 3.1 billion in 2010 66 72 55 49 24 48 0 84 35 10 -253 14 -492 -200 4Q non-commercial c
Slide 32: Zoom on corporate client segments
Commercial cost of risk - Corporates Zoom on corporate client segments KB Group – Corporate Segments 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 82 150 80 57 42 100 26 29 50 2011 cost of risk down to 29 bps compared 40 0 -50 -100 -123 -150 to 80 bps in 2010 -250 -273 -203 -200 -344 -250 -300 -35
Slide 33: Zoom on retail client segments
Commercial cost of risk - Retail KB Group – Retail Segments Zoom on retail client segments 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 250 175 168 166 171 151 135 2011 cost of risk down at 85 bps from 94 bps 97 94 98 93 87 150 85 in 2010 85 83 88 82 78 78 50 -50 Stable QoQ overall retail cost of
Slide 34: Agenda
Agenda Introduction and Strategy Macroeconomic Update Business Update Consolidated Financial Results Loan Portfolio Quality and Cost of Risk Appendix 34 KB Group – The Morgan Stanley European Financials Conference, London, 27th – 29th March 2012
Slide 35: Consolidated financial results: Profit and Loss Statement
Consolidated financial results Change Change Profit and Loss Statement 4Q 2010 3Q 2011 4Q 2011 4Q 2011 YoY YoY (CZK million, unaudited) Pro forma Pro forma Net interest income 5,449 5,579 5,671 5,574 4.1% 2.3% Net fees & commissions 2,028 1,837 1,720 1,710 -15.2% -15.7% Income from financial operati
Slide 36: Recurring financial results: Recurring P&L
Recurring financial results Change Change Recurring P&L 4Q 2010 3Q 2011 4Q 2011 YoY QoQ (CZK million, unaudited) Recurring Recurring Recurring Recurring Recurring Net interest income 5,431 5,431 5,564 2.5% 2.5% Net fees & commissions 2,028 1,844 1,870 -7.8% 1.4% Income from financial operations 804
Slide 37: KB consolidated group
KB consolidated group Pension Penzijní fond KB #4 pension fund in the Czech Republic with 508,000 clients insurance (100%) Modrá pyramida Building Second largest building society according to loan volume with 649,000 clients stavební society and 1,298 strong agent distribution network spořitelna (10
Slide 38: Business performance of subsidiaries 1/2
Business performance of subsidiaries 1/2 FY 2010 FY 2011 Change YoY MPSS Volume of new loans (CZK million) 9,025 7,785 -14% Volume of total loans (gross, CZK million) 49,700 51,369 3% Target volume of new contracts (CZK million) 33,208 25,008 -25% Volume of deposits (CZK million) 69,019 70,857 3% Av
Slide 39: Business performance of subsidiaries 2/2
Business performance of subsidiaries 2/2 FY 2010 FY 2011 Change YoY Factoring Factoring turnover (CZK million) 12,035 16,096 34% KB Volume of total financing (gross, CZK million) 1,924 2,832 47% Average number of FTEs 38 38 0% KP Newly concluded policies (number) 482,435 823,480 71% of which in life
Slide 40: Standalone results of KB group companies and associated undertakings
Standalone results of KB group companies and associated undertakings Account. Share of Net YoY Equity YoY Assets YoY standards KB Profit CZK million KB IFRS 100% 7,951 n.a. 72,468 n.a. 660,279 n.a. - o/w KB branch in Slovakia IFRS 100% 55 n.a. -20 n.a. 10,582 n.a. ESSOX, s.r.o. IFRS 51% 288 76.7% 2,
Slide 41: Securities portfolio in the banking book
Securities Securities portfolio in the banking book CZK billion Available-for-sale portfolio Held-to-maturity portfolio 78.5 78.5 CZK 125.3 billion CZK 3.4 billion 3.2 0.2 25.6 25.6 1.6 1.6 3.1 3.1 16.4 16.4 Czech sovereign Foreign sovereign Czech sovereign Foreign sovereign Czech financial institut
Slide 42: Foreign sovereign bond holdings by country and portfolio
Foreign sovereign exposure Foreign sovereign bond holdings by country and portfolio CZK billion 25.6 Portugal, 0.2 Greece, 2.1 EIB, 2.4 Slovakia, 5.3 Italy, 7.3 2.0 Slovakia, 0.7 Poland, 8.3 Poland, 1.3 0.2 France, 0.2 1) Trading book Available-for-sale 1) Held-to-maturity 2) Measurement at [1] fair
Slide 43: Evolution of clients' portfolio and networks
Number of clients and distribution network Evolution of clients‘ portfolio and networks Number of bank clients (CZ) KB Group‘s 2.6 million clients, of which KB bank 1,602,000 clients (+1%) MPSS 649,000 clients (-6%) PFKB 508,000 clients (+1%) 1,577 1,629 1,620 1,590 1,602 1,515 ESSOX 288,000 active
Slide 44: Czech Republic macroeconomic environment
Macroeconomic environment Czech Republic Macroeconomic Indicators 2008 2009 2010 2011* 2012* 2013* Real GDP (%, average) 2.9 -4.5 2.6 1.7 0.1 1.3 Inflation (%, average) 6.3 1.0 1.5 1.9 2.9 1.6 Household consumption (%, average) 3.0 -0.4 0.5 -0.5 -0.9 1.2 Unemployment (%, av., MLSA meth.) 5.5 8.0 9.0
Slide 45: Acquisition of own shares during 2011
Acquisition of own shares during 2011 Background The General Meeting approved that KB may acquire own equity shares as from April 21, 2011 in the quantity of up to 3,800,985 pieces in total. The authorised price range for purchases is between CZK 500 and CZK 6,000 per share. The validity term of thi
Slide 46: Interest rates evolution
Interest rates evolution (for the period 28 December 2001 – 19 March 2012) 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 01/01/2005 01/01/2006 01/01/2007 01/01/2008 01/01/2009 01/01/2010 01/01/2011 01/01/2012 Pribor 3M Pribor 6M ČNB REPO Rate IRS 5Y IRS 10Y 46 KB Group – The Morgan Sta
Slide 47: Development of KB's share price and PX Index
Development of KB‘s share price and PX Index (for the period 1 October 2001 – 19 March 2012) 4,800 2,100 4,300 1,900 1,700 3,800 1,500 3,300 1,300 2,800 1,100 2,300 900 1,800 700 1,300 500 800 300 01/10/01 01/10/02 01/10/03 01/10/04 01/10/05 01/10/06 01/10/07 01/10/08 01/10/09 01/10/10 01/10/11 KB (
Slide 48: Notes to recurring profit
Notes to recurring profit Overview of items excluded in order to calculate recurring profit FY 2011 (impact net of tax, KB Group share): amortisation of MPSS acquisition revaluation (CZK 41 mil.) impairment of Greek government bonds (CZK -4,338 mil.) SGEF acquisition (CZK 102 mil.) sale of bonds in
Slide 49: KB shareholders
KB shareholders As at 31 December 2011 Shares on registered capital according to excerpt from the Securities centre Others 39.6% Société Générale 60.4% As at 31 December 2011, KB held 238,672 own shares in treasury, representing 0.63% stake on registered capital. 49 KB Group – The Morgan Stanley Eur
Slide 50: Investor Relations
Investor Relations Jakub Černý, Georgina Olegrová, Robert Janeček Tel.: +420 955 532 156, 955 532 734, 955 532 155 E-mail: investor_relations@kb.cz - Internet: www.kb.cz 50 KB Group – The Morgan Stanley European Financials Conference, London, 27th – 29th March 2012
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