Slide 1: Komerční banka Group Financial results as of 30 September 2017
Komerční banka Group Financial results as of 30 September 2017 According to International Financial Reporting Standards, consolidated, unaudited Prague, 3 November 2017
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 Business results 4 Financial results 10 Loan portfolio quality and cost of risk 19 Appendix 22 3
Slide 4: Fixed investments becoming driver of growth
Economy of the Czech Republic Fixed investments becoming driver of growth GDP in 2Q17 up 2.5% QoQ, +4.7% YoY Real GDP outlook (YoY, %) In 3Q 2017, the Czech economy continued to grow at a solid pace still driven by domestic consumption 5.4 while fixed investments added to the growth, too 4.4 3.6
Slide 5: KB as of September 2017: good results in retail, acting pro-actively in the changing society
KB as of 30 September 2017: good results in retail, acting pro-actively in the changing society The number of Komerční banka’s clients continued to grow. The Bank had 1,657,000 Growth in number of clients clients, 7,000 more than a year earlier. 24% of clients use mobile banking. attesting to qual
Slide 6: Selected deals of the third quarter of 2017
Selected deals of the third quarter of 2017 REAL ESTATE TRADE TRANSPORTATION Nový Projekt CPI, s.r.o Letisko M. R. Štefánika - Airport VZV GROUP s.r.o. KOENIG, s.r.o Bratislava, a. s. Syndicated credit facility Working Capital Financing Syndicated credit facility EUR 37,000,000 EUR 5,000,000 EUR 36,
Slide 7: Dynamic retail loans. Intense competition for lending in the over-liquid market
Loans to clients Dynamic retail loans. Intense competition for lending in the over-liquid market CZK billion 615.2 625.8 593.4 595.4 596.1 Gross loans (excluding repo) up by 2.0% YoY, +0.9% 570.8 40.6 42.0 37.7 38.1 38.8 39.5 QoQ to CZK 605.1 billion. Total Loans and advances to 201.1 207.8 210.1
Slide 8: Deposit growth moderated
Deposits and other assets under management CZK billion Group deposits Deposit growth moderated 758.2 781.9 797.1 694.3 708.6 699.4 62.5 63.8 62.6 64.9 64.1 64.1 242.2 245.7 236.0 Standard Group deposits (excluding repo) grew by 208.9 215.8 230.1 +9.7% YoY to CZK 777.5 billion, +0.8% QoQ. Total amo
Slide 9: Agenda
Agenda Business results 4 Financial results 10 Loan portfolio quality and cost of risk 19 Appendix 22 9
Slide 10: Net result up due to low cost of risk
Consolidated income statement Net result up due to low cost of risk Profit and Loss Statement Reported Recurring Change Change (CZK million, unaudited) 9M 2016 9M 2017 9M 2016 9M 2017 YoY YoY Net interest income 15,769 15,485 -1.8% 15,769 15,485 -1.8% Net fees & commissions 5,084 4,783 -5.9% 5,084 4
Slide 11: Improved appeal of central bank's repo facility
Consolidated statement of financial position Improved appeal of central bank’s repo facility 30 Sep 31 Dec 30 Sep Balance Sheet 2016 2016 2017 YoY Ytd (CZK million, unaudited) Reported Reported Reported Assets 962,791 922,737 1,060,409 10.1% 14.9% Cash and balances with central bank 147,234 112,241
Slide 12: Book value influenced by changes in accounting value of hedges
Shareholders’ equity Book value influenced by changes in accounting value of hedges which are held until maturity Contributions to equity in 9M 2017 Shareholders’ equity declined year to date by 6.0% to CZK 99.1 billion as accumulation of 11,225 undistributed profit was more than offset by decreas
Slide 13: Solid capital before increase in regulatory requirement
Financial ratios Solid capital before increase in regulatory requirement Reported Recurring (year-to-date) 30/9/2016 31/12/2016 30/9/2017 30/9/2016 30/9/2017 Capital adequacy (reported, comprising only Core Tier 1 15.0% 16.2% 16.8% Total risk weighted assets (CZK billion) 443.0 442.9 450.6 Risk weig
Slide 14: Delayed projection of higher market rates into lending
Net interest income Delayed projection of higher market rates into lending NII in 9M 2017 -1.8% YoY. 3Q 2017 +0.5% QoQ 5,213 5,323 5,299 5,165 5,148 5,172 318 322 290 307 313 323 Pressure on spreads in retail lending, in the situation of growing market rates 2,622 2,716 2,717 2,633 2,659 2,608
Slide 15: Almost stable fee income adjusted for sale of merchant acquiring
Net fees and commissions Almost stable fee income adjusted for sale of merchant acquring NFC in 9M 2017 down by 5.9% YoY. 3Q -6.2% QoQ 1,708 1,676 1,661 1,599 1,564 1,558 Deposit product fees – YoY affected by rewards 197 204 201 203 267 within the MojeOdměny loyalty programme. New 185 189 196 1
Slide 16: Moderation of client activity after extraordinary first half
Net profit from financial operations Moderation of client activity after extraordinary first half 1,626 Recurring NPFO in 9M 2017 was up by strong 32.2% thanks to strong clients’ activity before and 373 shortly after the release of the CZK currency floor 297 1,051 on 6 April. 3Q 2017 down -23.3% Q
Slide 17: Costs under control despite increasing inflation
Operating expenditures Costs under control despite increasing inflation 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017 OPEX for 9M 2017 excluding net gain in Q1 from the 449 sale and revaluation of KB’s headquarters buildings1 1 grew by +1.4% YoY, less than the inflation. Reported -1,737 -1,810 -
Slide 18: Agenda
Agenda Business results 4 Financial results 10 Loan portfolio quality and cost of risk 19 Appendix 22 18
Slide 19: Persisting sound asset quality
Loan portfolio quality Persisting sound asset quality Gross lending CZK billion Loan exposure +5.5% YoY, QoQ +1.7% 615.2 625.8 570.8 593.4 595.4 596.1 LUSR exposure ratio down to 3.2% (vs. 3.9% in 3Q 2016) and NPL exposure ratio down to 563.2 563.6 565.3 585.5 596.8 2% (vs. 2.6% in 3Q 2016) driv
Slide 20: Cost of risk at exceptionally low level
Cost of Risk Cost of risk at exceptionally low level CoR in 9M 2017 at CZK 228 million (net Total Cost of Risk (Year-to-date, in basis points) releases) in comparison with CZK -1,225 million 64 65 71 (net creation) in 9M 2016 30 32 9M 2017 YtD Cost of Risk at -5 bps 29 13 11 -3 Cost of Risk on
Slide 21: Agenda
Agenda Business results 4 Financial results 10 Loan portfolio quality and cost of risk 19 Appendix 22 21
Slide 22: Number of clients and distribution network
Number of clients and distribution network Number of bank clients (thousands, CZ) KB Group’s 2.4 million clients, of which KB bank 1,657,000 clients (0%) MPSS 478,000 clients (-3%) KBPS 533,000 clients (-1%) 1,626 1,647 1,654 1,657 1,602 1,589 ESSOX (Group) 213,000 active clients (-4%) N
Slide 23: Consolidated income statement – quarterly view
Consolidated income statement – quarterly view Profit and Loss Statement Change Change 3Q 2016 2Q 2017 3Q 2017 YoY QoQ (CZK million, unaudited) Net interest income 5,323 5,148 5,172 -2.8% 0.5% Net fees & commissions 1,676 1,661 1,558 -7.0% -6.2% Income from financial operations 652 941 722 10.7% -23
Slide 24: Recurring P&L – quarterly view
Recurring P&L – quarterly view Profit and Loss Statement 3Q 2016 2Q 2017 3Q 2017 Change Change recurring recurring recurring YoY QoQ (CZK million, unaudited) Net interest income 5,323 5,148 5,172 -2.8% 0.5% Net fees & commissions 1,676 1,661 1,558 -7.0% -6.2% Income from financial operations 653 941
Slide 25: Business performance of subsidiaries 1/2
Business performance of subsidiaries 1/2 9M 2016 9M 2017 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 6,818 10,409 53% Volume of total loans (gross, CZK million) 38,126 41,966 10% Volume of deposits (CZK million) 64,150 62,492 -3% Number of clients
Slide 26: Business performance of subsidiaries 2/2
Business performance of subsidiaries 2/2 9M 2016 9M 2017 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 27,111 31,173 15% Volume of total financing (gross, CZK million) 7,178 8,043 12% Average number of FTEs 45 45 2% Komerční pojišťovna (49%), a universal
Slide 27: Macroeconomic environment – Czech Republic
Macroeconomic environment – Czech Republic Macroeconomic Indicators 2013 2014 2015 2016 2017* 2018* Real GDP (%, average) -0.5 2.7 5.4 2.5 4.4 3.6 Inflation (%, average) 1.4 0.4 0.3 0.7 2.4 2.2 Household consumption (%, average) 0.5 1.8 3.8 3.6 4.1 4.0 Unemployment (%, av., MLSA meth.) 7.8 7.6 6.4 5
Slide 28: Interest rates evolution
Interest rates evolution (for the period 1 January 2005 – 1 November 2017) 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Pribor 3M Pribor 6M ČNB REPO Rate IRS 5Y IRS 10Y 28
Slide 29: KB #1 listed Czech bank
KB shares and shareholders KB #1 listed Czech bank Development of KB share price and PX index As of 30 September 2017 (1 October 2001 – 1 November 2017) 500% The Bank had 45,515 shareholders as of the end of 400% the quarter, of which 40,326 were private individuals from the Czech Republic 300%
Slide 30: Investor Relations
Investor Relations Jakub Černý, Robert Janeček, Renata Swaczynová, Kamila Corbet Tel.: +420 955 532 156, 955 532 734, 955 532 155 E-mail: investor_relations@kb.cz - Internet: www.kb.cz 30