Komercni Banka, A.s. · PSECZ:KOMB
Komercni Banka, A.s — FY2018 Earnings Presentation
40 slides from Komercni Banka, A.s's earnings presentation, Feb 7, 2019
Slide 1: Komerční banka Group Financial results as of 31 December 2018
Komerční banka Group Financial results as of 31 December 2018 ACCORDING TO INTERNATIONAL FINANCIAL REPORTING STANDARDS, CONSOLIDATED, UNAUDITED PRAGUE, 7 FEBRUARY 2019
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 HIGHLIGHTS OF KB’s PERFORMANCE MACROECONOMIC ENVIRONMENT STRATEGY BUSINESS PERFORMANCE FINANCIAL PERFORMANCE ASSET QUALITY & COST OF RISK DIVIDEND PROPOSAL & OUTLOOK FOR 2019 APPENDIX KB GROUP AS OF 31 DECEMBER 2018 7 FEBRUARY 2019 3
Slide 4: Key performance indicators from 4Q 2018
QUARTERS’ HIGHLIGHTS KEY PERFORMANCE INDICATORS FROM 4Q 2018 The number of clients with KB Mobile Banking leapt by 40% to 611,000, the highest figure Mobile banking clients on the Czech market. In two months, 51,000 clients activated KB Klíč application +175,000 YoY to 611,000 Total number of KB Ban
Slide 5: Sharing value with key stakeholders
DISTRIBUTION OF VALUE CREATED SHARING VALUE WITH KEY STAKEHOLDERS EMPLOYEES . CLIENTS . ENVIRONMENT . Developing non-discriminatory and purposeful Winning trust of 2.4 million clients Responsible lending and sourcing practices corporate culture Improved client Gas and heat consumption reduced by 19%
Slide 6: Agenda
AGENDA HIGHLIGHTS OF KB’s PERFORMANCE MACROECONOMIC ENVIRONMENT STRATEGY BUSINESS PERFORMANCE FINANCIAL PERFORMANCE ASSET QUALITY & COST OF RISK DIVIDEND PROPOSAL & OUTLOOK FOR 2019 APPENDIX KB GROUP AS OF 31 DECEMBER 2018 7 FEBRUARY 2019 6
Slide 7: Government investments picking up after protracted sluggishness
ECONOMY OF THE CZECH REPUBLIC GOVERNMENT INVESTMENTS PICKING UP AFTER PROTRACTED SLUGGISHNESS Czech GDP growth (%, yoy) GDP in 3Q18 up +2.4% YoY, +0.6% QoQ. Growth driven by fixed investments and household consumption Investment activity of corporations strong in 2018, complemented recently by g
Slide 8: Agenda
AGENDA HIGHLIGHTS OF KB’s PERFORMANCE MACROECONOMIC ENVIRONMENT STRATEGY BUSINESS PERFORMANCE FINANCIAL PERFORMANCE ASSET QUALITY & COST OF RISK DIVIDEND PROPOSAL & OUTLOOK FOR 2019 APPENDIX KB GROUP AS OF 31 DECEMBER 2018 7 FEBRUARY 2019 8
Slide 9: Tangible progress in strategic transformation
KB CHANGE TANGIBLE PROGRESS IN STRATEGIC TRANSFORMATION Pursuing improvements in client experience Organisational optimisation Introduced 24/7 instant payments within KB, significant acceleration of inter-bank payments Full scale rollout of agile@KB – 16 tribes and 5 centres of expertise Established
Slide 10: Positive development in client satisfaction
POSITIVE DEVELOPMENT IN CLIENT SATISFACTION Net Promoter Score (NPS) 0 1 2 3 4 5 6 7 8 9 10 % of Promoters - % of Detractors DETRACTORS PASSIVES PROMOTERS KB’s NPS client satisfaction scores improved year-on-year in all segments Individual clients NPS at 24 best scores for bank advisors, 91% happy
Slide 11: Agenda
AGENDA HIGHLIGHTS OF KB’s PERFORMANCE MACROECONOMIC ENVIRONMENT STRATEGY BUSINESS PERFORMANCE FINANCIAL PERFORMANCE ASSET QUALITY & COST OF RISK DIVIDEND PROPOSAL & OUTLOOK FOR 2019 APPENDIX KB GROUP AS OF 31 DECEMBER 2018 7 FEBRUARY 2019 11
Slide 12: Selected deals of the fourth quarter of 2018
SELECTED DEALS SELECTED DEALS OF THE FOURTH QUARTER OF 2018 KB GROUP AS OF 31 DECEMBER 2018 7 FEBRUARY 2019 12
Slide 13: Loans to clients: continued growth despite intense competition
LOANS TO CLIENTS CONTINUED GROWTH DESPITE INTENSE COMPETITION ON THE MARKET Gross loans +4.7% YoY, +0.9% QoQ to CZK 634.6 billion Group lending (including repo, incl. client bonds) (excluding repo operations but including Debt securities CZK billion issued by KB’s corporate clients). 625.8 628.3 6
Slide 14: Deposits and other assets under management
DEPOSITS AND OTHER ASSETS UNDER MANAGEMENT GROWTH RELATIVELY FASTER IN RETAIL AND ON TERM DEPOSITS CZK billion Group deposits (incl. repo operations) 850.9 Standard Group deposits (excluding repo) up +5.2% 797.1 814.7 832.0 812.5 762.0 61.1 YoY to CZK 795.6 billion, -1.7% QoQ 62.5 61.6 61.3 61.8 6
Slide 15: Agenda
AGENDA HIGHLIGHTS OF KB’s PERFORMANCE MACROECONOMIC ENVIRONMENT STRATEGY BUSINESS PERFORMANCE FINANCIAL PERFORMANCE ASSET QUALITY & COST OF RISK DIVIDEND PROPOSAL & OUTLOOK FOR 2019 APPENDIX KB GROUP AS OF 31 DECEMBER 2018 7 FEBRUARY 2019 15
Slide 16: Improved recurring profitability
RECONCILIATION OF INCOME IMPROVED RECURRING PROFITABILITY Drivers for year on year change in attributable net income (as of 31 December 2018) -0.6% +5.8% -64 -317 14,930 -266 256 14,845 14,846 -44 -277 1,524 1 -897 14,033 Reported One-offs Recurring NII NFC NPFO & Recurring CoR Other* Tax Recurring
Slide 17: Balance sheet growth driven mainly by deposits from clients and banks
STATEMENT OF FINANCIAL POSITION BALANCE SHEET GROWTH DRIVEN MAINLY BY DEPOSITS FROM CLIENTS AND BANKS CZK billion Assets Liabilities & Equity 1,060 1,060 Change Change year-to-date 92 year-to-date 281 +5.8% +58 +5.8% +58 9.8% 8 10.0% 26 812 625 6.6% 50 5.3% 31 3 3 47 118 1.6% 103 5.3% 36 5 2 -1.4% -
Slide 18: Recurring capital generation
REGULATORY CAPITAL, SHAREHOLDERS’S EQUITY, RISK-WEIGHTED ASSETS RECURRING CAPITAL GENERATION Contributions to capital adequacy ratio in FY 2018 (%) Contributions to equity in FY 2018 (CZK million) -14 bps +5.3% 3.50 -8,876 14,846 103,329 18.63 98,162 -489 -314 18.50 -2.27 -0.23 -0.97 -0.16 31 Dec RW
Slide 19: Net interest and similar income
NET INTEREST AND SIMILAR INCOME POSITIVE EFFECT OF GROWING VOLUMES AND INTEREST RATES Net interest income in FY 2018 up by 7.3% YoY. NII in 4Q 2018 was up 4.3% QoQ NII from deposits up due to higher reinvestment yields and increase in volumes Spreads on lending under pressure reflecting intens
Slide 20: Net fees and commissions
NET FEES AND COMMISSIONS IMPROVING STRUCTURE OF FEE INCOME 1,640 1,572 1,628 1,519 1,505 1,514 NFC in FY 2018 down 1.0% YoY, 4Q +7.5% QoQ 230 214 199 196 210 199 177 195 196 Deposit product fees – supported by clients 176 186 195 169 175 175 171 173 166 upgrading to premium account bundles 367 3
Slide 21: Net profit from financial operations
NET PROFIT FROM FINANCIAL OPERATIONS EXCELLENT RESULT FOR THE FULL YEAR NPFO in FY 2018 down by 10.2% YoY, 4Q18 1,013 lower by 22.0% QoQ 862 790 722 747 660 595 YoY decrease in NPFO due to the significant 358 560 401 client hedging activity in 2017 linked to the end of 424 351 CNB’s currency int
Slide 22: Recurring costs grew less than inflation
OPERATING EXPENDITURES RECURRING COSTS GREW LESS THAN INFLATION 3Q 2017 4Q 2017 1Q 2018 2Q 2018 3Q 2018 4Q 2018 Recurring* OPEX for FY 2018 grew by +1.9% YoY. Reported OPEX in FY 2018 was up 0.9% YoY 19 Recurring* Cost / Income in FY 2018 at 45.1% (v. 45.9% -1,887 -1,803 -1,847 -1,896 -2,151 -1,
Slide 23: Agenda
AGENDA HIGHLIGHTS OF KB’s PERFORMANCE MACROECONOMIC ENVIRONMENT STRATEGY BUSINESS PERFORMANCE FINANCIAL PERFORMANCE ASSET QUALITY & COST OF RISK DIVIDEND PROPOSAL & OUTLOOK FOR 2019 APPENDIX KB GROUP AS OF 31 DECEMBER 2018 7 FEBRUARY 2019 23
Slide 24: Sound asset quality, refined IFRS 9 staging
LOAN PORTFOLIO QUALITY SOUND ASSET QUALITY, REFINED IFRS 9 STAGING Gross lending Loan exposure up 4.8 % YoY and -0.6% QoQ CZK billion 625.8 607.4 628.3 635.2 640.7 636.6 607.4 Stage 2 exposure up 54% QoQ, following full alignment with IFRS 9 methodology (CZK 11 bil. 596.8 565.8 587.8 595.3 601.2
Slide 25: Low cost of risk, new reserves in retail
COST OF RISK LOW COST OF RISK, NEW RESERVES IN RETAIL FY 2018 CoR net release at CZK 642 million Total Cost of Risk (Year-to-date, in basis points) (vs. CoR net release at CZK 387 million for FY 11 2017) 4 0 -2 -5 -5 -11 CoR on corporate loan portfolio at -20 bps for -5 -6 -10 -12 -13 -14 -15 FY
Slide 26: Agenda
AGENDA HIGHLIGHTS OF KB’s PERFORMANCE MACROECONOMIC ENVIRONMENT STRATEGY BUSINESS PERFORMANCE FINANCIAL PERFORMANCE ASSET QUALITY & COST OF RISK DIVIDEND PROPOSAL & OUTLOOK FOR 2019 APPENDIX KB GROUP AS OF 31 DECEMBER 2018 7 FEBRUARY 2019 26
Slide 27: Proposed 65% payout from 2018 result
DIVIDENDS PROPOSED 65% PAYOUT FROM 2018 RESULT, INTENTION TO PROPOSE 65% FROM 2019 Dividend per share (gross, in CZK, recalculated) In accordance with its intention announced in February 2018 regarding the share of net profit 62 62 to be paid out in dividends, the Management 51 46 47 Board propose
Slide 28: Outlook for 2019
FINANCIAL AND BUSINESS OUTLOOK OUTLOOK FOR 2019 Czech economy to grow close to 3.0% driven by household consumption and investments Tight labour market still to generate growth bottlenecks and keep inflation around the 2% inflation target Macroeconomic which allow further two hikes of 2W repo ra
Slide 29: Agenda
AGENDA HIGHLIGHTS OF KB’s PERFORMANCE MACROECONOMIC ENVIRONMENT STRATEGY BUSINESS PERFORMANCE FINANCIAL PERFORMANCE ASSET QUALITY & COST OF RISK DIVIDEND PROPOSAL & OUTLOOK FOR 2019 APPENDIX KB GROUP AS OF 31 DECEMBER 2018 7 FEBRUARY 2019 29
Slide 30: Number of clients and distribution network
KB GROUP CLIENTS AND DISTRIBUTION NERWORK NUMBER OF CLIENTS AND DISTRIBUTION NETWORK Number of bank clients (thousands, CZ) KB Group’s 2.4 million clients(+0%), of which KB bank 1,668,000 clients (+0%) MPSS 490,000 clients (+0%) KBPS 532,000 clients (+0%) ESSOX (Group) 212,000 active clien
Slide 31: Year-to-date income statement
CONSOLIDATED INCOME STATEMENT YEAR-TO-DATE INCOME STATEMENT Profit and Loss Statement Reported* Recurring Change Change (CZK million, unaudited) FY 2017 FY 2018 FY 2017 FY 2018 YoY YoY Net interest income and similar income 20,985 22,509 7.3% 20,985 22,509 7.3% Net fee & commission income 6,284 6,22
Slide 32: Quarterly reported profit & loss
CONSOLIDATED INCOME STATEMENT – QUARTERLY VIEW QUARTERLY REPORTED PROFIT & LOSS (INCLUDING ONE-OFF ITEMS) Profit and Loss Statement Reported* Change Change (CZK million, unaudited) 4Q 2017 3Q 2018 4Q 2018 YoY QoQ Net interest income and similar income 5,364 5,735 5,981 11.5% 4.3% Net fee & commissio
Slide 33: Consolidated statement of financial position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION BALANCE SHEET GROWTH DRIVEN MAINLY BY DEPOSITS FROM CLIENTS AND BANKS 31 Dec 1 Jan 31 Dec Balance Sheet 2017 2018 *2018 Ytd Ytd According According According rel. abs. (CZK million, unaudited) to IAS 39 to IFRS 9 to IFRS 9 Assets 1,004,039 1,001,652 1,059
Slide 34: Capital & profitability indicators
FINANCIAL RATIOS CAPITAL & PROFITABILITY INDICATORS Reported Recurring (year-to-date, IFRS9) 31/12/2017 31/12/2018 31/12/2017 31/12/2018 Capital adequacy 18.6% 18.5% Tier 1 ratio = Core Tier 1 ratio 18.0% 17.9% Risk weighted assets for credit risk (CZK billion) 352.9 375.4 Net interest margin*, annu
Slide 35: Business performance of subsidiaries 1/2
OVERVIEW OF KB SUBSIDIARIES BUSINESS PERFORMANCE OF SUBSIDIARIES 1/2 FY 2017 FY 2018 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 14,639 14,230 -3% Volume of total loans (gross, CZK million) 43,634 50,688 16% Volume of deposits (CZK million) 62,669
Slide 36: Business performance of subsidiaries 2/2
OVERVIEW OF KB SUBSIDIARIES BUSINESS PERFORMANCE OF SUBSIDIARIES 2 / 2 FY 2017 FY 2018 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 42,838 50,168 17% Volume of total financing (gross, CZK million) 7,974 8,965 12% Average number of FTEs 45 44 -2% Komerční
Slide 37: Macroeconomic environment – Czech Republic
MACROECONOMIC ENVIRONMENT – CZECH REPUBLIC Macroeconomic Indicators 2015 2016 2017 2018* 2019* Real GDP (%, average) 5.4 2.4 4.5 2.8 2.7 Inflation (%, average) 0.3 0.7 2.5 2.1 2.3 Household consumption (%, average) 3.8 3.5 4.4 3.5 3.2 Unemployment (%, av., MLSA meth.) 5.0 3.9 2.9 2.3 2.1 M2 (%, aver
Slide 38: Interest rates evolution
INTEREST RATES EVOLUTION (for the period 1 January 2006 – 30 January 2019) KB GROUP AS OF 31 DECEMBER 2018 7 FEBRUARY 2019 38
Slide 39: KB #1 listed Czech bank
KB SHARES AND SHAREHOLDERS KB #1 LISTED CZECH BANK As of 31 December 2018 Development of KB share price and PX index (1 January 2001 – 30 January 2019) The number of shareholders comprised 48,265 corporate entities and private individuals. Of the Bank’s total share capital of CZK 19,004,926,000
Slide 40: Investor Relations
Investor Relations Jakub Černý, Renata Swaczynová, David Kocourek Tel.: +420 955 532 156, 955 532 155, 955 532 734 E-mail: investor_relations@kb.cz - Internet: www.kb.cz KB GROUP AS OF 31 DECEMBER 2018 7 FEBRUARY 2019 40