Komercni Banka, A.s. · PSECZ:KOMB
Komercni Banka, A.s — Non-Deal Roadshow (May 2018)
42 slides from Komercni Banka, A.s's roadshow presentation, May 16, 2018
Slide 1: Komerční banka Group
Komerční banka Group I n ve st o r p r e se n t a t ion a s o f 3 1 M a r ch 2 0 1 8 NON-DEAL ROADSHOW WITH J.P.MORGAN, LONDON, 15 & 16 MAY 2018
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 │ MACROECONOMIC ENVIRONMENT 4 │ KB´S MARKET POSITION AND LONG-TERM PERFORMANCE 5 │ KB CHANGE 2020 STRATEGIC UPDATE 9 │ BUSINESS PERFORMANCE 17 │ FINANCIAL PERFORMANCE 21 │ ASSET QUALITY AND COST OF RISK 31 APPENDIX 33 KB GROUP AS OF 31 MARCH 2018 07 MAY 2018 3
Slide 4: Economy running at full steam but inflation remains muted
ECONOMY OF THE CZECH REPUBLIC ECONOMY RUNNING AT FULL STEAM BUT INFLATION REMAINS MUTED GDP in 4Q17 up 0.5% QoQ, +5.2% YoY. Growth was driven by Real GDP outlook (YoY, %) all demand-side components except net exports. Private consumption and investments were the main growth drivers, contributing 2 p
Slide 5: KB's Market Position and Long-Term Performance
KB’s MARKET POSITION LONG-TERM PERFORMANCE
Slide 6: KB reinforcing position in target areas
MARKET SHARES KB REINFORCING POSITION IN TARGET AREAS Bank assets Bank client loans Mortgages to individuals CS CSOB (Erste) (KBC) 20.9% 20.0% Unicredit 8.6% KB 18.4% Raiffeisen 8.4% Moneta 3.9% Others 19.8% Group consumer lending Bank loans to business Bank client deposits CS CSOB (Erste) (KBC) 17.
Slide 7: Portfolio rebalancing
LONG-TERM DEVELOPMENT OF LOAN PORTFOLIO PORTFOLIO REBALANCING Development of KB Group loan portfolio Lending growth CAGR 2006-1Q 2018: 8.1% (including growth by acquisition) KB GROUP AS OF 31 MARCH 2018 07 MAY 2018 7
Slide 8: Growth in business volumes offsetting margin pressures
KB’S LONG-TERM PERFORMANCE GROWTH IN BUSINESS VOLUMES OFFSETTING MARGIN PRESSURES CZK million, IFRS 2012 2013 2014 2015 2016 2017 1Q 2018 Net banking income 32,664 30,894 30,677 31,044 31,750 31,060 5,349 Total operating costs -13,485 -13,148 -13,065 -14,352 -14,026 -13,375 -4,060 Attributable net p
Slide 9: KB Change 2020 Strategic Update
KB CHANGE 2020 STRATEGIC UPDATE
Slide 10: Key challenges underlying the need to change
KEY CHALLENGES KEY CHALLENGES UNDERLYING THE NEED TO CHANGE COMPETITION Margins on the Czech market recorded a sharp decline over the past 6 years and approached Western European levels The decline is expected to continue, albeit at slower pace, as the Czech market remains attractive for EROSION OF
Slide 11: Strategic vision of Komerční banka
VISION AND MISSION STRATEGIC VISION OF KOMERČNÍ BANKA Mission The real bank for real situations "Who is KB?" We stand by ambitious affluent and high potential individuals and their families, small Vision businesses and corporations, support them throughout their lifetime journeys and diverse "What d
Slide 12: Segment strategic directions – individual clients
STRATEGIC UPDATE - INDIVIDUALS SEGMENT STRATEGIC DIRECTIONS – INDIVIDUAL CLIENTS Segment strategic directions Ambitions by 2020 Steps to be taken • Leadership position in customer • Implement proactive appointment- • Best-in-class advisory and lifetime satisfaction mainly on higher-end based advisor
Slide 13: Segment strategic directions – small and medium-sized enterprises
STRATEGIC UPDATE – SME SEGMENT STRATEGIC DIRECTIONS – SMALL AND MEDIUM-SIZED ENTREPRISES Segment strategic directions Ambitions by 2020 Steps to be taken • Faster and simple lending process • Standing by the business clients of all • Leadership position in customer based on automated credit scoring
Slide 14: Segment strategic directions – corporate & investment banking
STRATEGIC UPDATE – CIB SEGMENT STRATEGIC DIRECTIONS – CORPORATE & INVESTMENT BANKING Segment strategic directions Ambitions by 2020 Steps to be taken • Provide the broadest product portfolio • Faster and simple lending process backed-up by Société Générale • Confirm leadership in NPS based on automa
Slide 15: Organisational optimisation
ORGANISATIONAL OPTIMISATION ORGANISATIONAL OPTIMISATION Implementation of Delayering and Advanced data agile@scale optimisation of span of analytics and reporting organisational model control Change and improvement Fostering leadership, activities to be organised in delegation and information Retail
Slide 16: Financial assessment
STRATEGIC UPDATE - FINANCIAL ASSESSMENT FINANCIAL ASSESSMENT Key financial benefits of the KB Change 2020 plan • Revenue increase, mainly driven by higher volume of loans and assets under management, • OPEX savings from improved efficiency and branch network downsizing, • CAPEX savings from improved
Slide 17: Business Performance
BUSINESS PERFORMANCE Banka roku Banka roku 2017 2016
Slide 18: Growing number of bank and group clients
K B G R O U P C L I E N T S A N D D I S T R IB UT I O N N E R W O R K GROWING NUMBER OF BANK AND GROUP CLIENTS Number of bank clients (thousands, CZ) KB Group’s 2.4 million clients(+0.4%), of which KB bank 1,666,000 clients (1%) MPSS 486,000 clients (0%) KBPS 532,000 clients (0%) 1,647 1,654 1,664 1
Slide 19: Growth in over-liquid market
LOANS TO CLIENTS GROWTH IN OVER-LIQUID MARKET Gross loans up by 2.8% YoY, +1.1% QoQ to CZK 612.7 Group lending (including repo, incl. client bonds) billion (excluding repo operations but including Debt CZK billion 615.2 625.8 607.4 628.3 securities issued by KB’s corporate clients). Including 595.4
Slide 20: Deposit growth faster in retail
DEPOSITS AND OTHER ASSETS UNDER MANAGEMENT DEPOSIT GROWTH FASTER IN RETAIL Standard Group deposits (excluding repo) up +4.3% Group deposits (incl. repo operations) CZK billion 797.1 814.7 YoY to CZK 790.7 billion. Seasonally +4.6% QoQ after 758.2 781.9 762.0 699.4 62.5 61.6 4Q 2017 was affected by c
Slide 21: Financial Performance
FINANCIAL PERFORMANCE Banka roku Banka roku 2017 2016
Slide 22: Correction in net profit linked to normalisation of financial operations gains
CONSOLIDATED INCOME STATEMENT CORRECTION IN NET PROFIT LINKED TO NORMALISATION OF FINANCIAL OPERATIONS GAINS AND SMALLER CONTRIBUTION FROM ONE-OFFS Profit and Loss Statement Reported* Recurring Change Change (CZK million, unaudited) 1Q 2017 1Q 2018 1Q 2017 1Q 2018 YoY YoY Net interest income and sim
Slide 23: Balance sheet structure influenced by IFRS 9 application
CONSOLIDATED STATEMENT OF FINANCIAL POSITION BALANCE SHEET STRUCTURE INFLUENCED BY IFRS 9 APPLICATION 31 Mar 31 Dec 1 Jan * Balance Sheet 2017 2017 2018 31 Mar 2018 Ytd According According According According (CZK million, unaudited) to IAS 39 to IAS 39 to IFRS 9 to IFRS 9 Assets 1,035,880 1,004,039
Slide 24: Equity driven by earnings
EQUITY EQUITY DRIVEN BY EARNINGS Total equity increased year to date by 2.9% to Contributions to equity in 1Q 2018 CZK 101.0 billion due to accumulation of 2,999 75 101,041 retained earnings 98,162 -195 Sensitivity of equity account (or Other comprehensive income) to changes in interest rates has be
Slide 25: Strong capital & liquidity
FINANCIAL RATIOS STRONG CAPITAL & LIQUIDITY PROFITABILITY INDICATORS INFLUENCED IN FIRST QUARTER BY IFRIC 21 Reported Recurring (year-to-date, IFRS9) 31/03/2017 31/12/2017 31/03/2018 31/03/2017 31/03/2018 Capital adequacy 15.7% 18.6% 18.3% Tier 1 ratio = Core Tier 1 ratio 15.7% 18.0% 17.7% Risk weig
Slide 26: Net interest and similar income
NET INTEREST AND SIMILAR INCOME BENEFIT OF INCREASING INTEREST RATES PARTLY OFFSET BY LOAN MARGIN PRESSURE 5,349 5,214 5,196 5,211 5,364 5,349 Net interest income in 1Q 2018 +2.6% YoY. NII 289 306 311 322 351 380 in 1Q 2018 was down -0.3% QoQ 2,769 2,682 2,709 2,648 2,663 2,527 NII from loans decrea
Slide 27: Seasonally lower fee income in first quarter
NET FEES AND COMMISSIONS SEASONALLY LOWER FEE INCOME IN FIRST QUARTER 1,610 1,640 NFC in 1Q 2018 down by 0.7% YoY. Seasonally 1,547 1,519 1,505 1,515 267 229 lower by -8.2% v. 4Q 2017 201 203 196 210 177 187 183 178 176 186 Deposit product fees increased as the number of 183 204 185 180 177 175 acti
Slide 28: Financial gains lower compared to extraordinary 2017
NET PROFIT FROM FINANCIAL OPERATIONS FINANCIAL GAINS LOWER COMPARED TO EXTRAORDINARY 2017 1,051 NPFO in 1Q 2018 down by 37.2% YoY and lower 941 826 862 by -23.4% QoQ. 722 660 739 YoY decrease in NPFO expected as 2017 was 504 653 560 424 351 boosted by significant client activity around end of CNB’s
Slide 29: Recurring costs up less than the inflation
OPERATING EXPENDITURES RECURRING COSTS UP LESS THAN THE INFLATION 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 Recurring OPEX for 1Q 2018 grew by +1.3% YoY1. 1 Reported OPEX in 1Q 2018 decreased by -4.5% YoY. -1,790 -1,763 -1,868 -1,887 -1,803 -1,847 OPEX in 1Q 2018 up +14.6% QoQ influenced by es
Slide 30: Asset Quality Cost of Risk
ASSET QUALITY COST OF RISK Banka roku Banka roku 2017 2016
Slide 31: Sound asset quality
LOAN PORTFOLIO QUALITY SOUND ASSET QUALITY Gross lending CZK billion Loan exposure up 5.4% YoY, up 3.5% QoQ 596.1 615.2 625.8 607.4 607.4 628.3 IFRS9 provisioning standard implementation 565.3 585.5 596.8 579.3 565.8 587.8 Limited financial impact (one-off increase of stock of provisions by 6%) 9.2
Slide 32: Cost of risk at exceptionally low level
COST OF RISK COST OF RISK AT EXCEPTIONALLY LOW LEVEL Total Cost of Risk (Year-to-date, in basis points) Net release of CoR in 1Q 2018 at CZK 83 71 million (vs. net release of CoR in 1Q 2017 at CZK 83 million) 32 13 11 -3 4 Cost of Risk on Corporates at -12 bps in 1Q 0 -1 -3 -5 -6 -5 2018 (vs. -3 bps
Slide 33: Appendix
& KB APPENDIX 4 4 Banka roku Banka roku 2017 2016
Slide 34: Quarterly results influenced by seasonality
CONSOLIDATED INCOME STATEMENT – QUARTERLY VIEW QUARTERLY RESULTS INFLUENCED BY SEASONALITY Profit and Loss Statement Change Change (CZK million, unaudited) 1Q 2017 4Q 2017 1Q 2018 YoY QoQ Net interest income and similar income 5,214 5,364 5,349 2.6% -0.3% Net fee & commission income 1,515 1,640 1,50
Slide 35: Business performance of subsidiaries 1/2
O V E R V I E W O F K B S U B S I D I AR IE S BUSINESS PERFORMANCE OF SUBSIDIARIES 1/2 1Q 2017 1Q 2018 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 3,358 3,589 7% Volume of total loans (gross, CZK million) 39,453 45,230 15% Volume of deposits (CZK
Slide 36: Business performance of subsidiaries 2/2
O V E R V I E W O F K B S U B S I D I AR IE S BUSINESS PERFORMANCE OF SUBSIDIARIES 2/2 1Q 2017 1Q 2018 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 9,598 11,681 22% Volume of total financing (gross, CZK million) 7,241 7,865 9% Average number of FTEs 45 4
Slide 37: Debt securities portfolio in the banking book
SECURITIES DEBT SECURITIES PORTFOLIO IN THE BANKING BOOK IAS 39 IFRS 9 CZK billion 97.4 93.1 94.2 Held-to-maturity Debt securities at amortized cost Czech government bonds Loans & receivables Financal assets at fair value through Foreign government bonds Available-for-sale Other comprehensive income
Slide 38: Market with a continued growth potential
CZECH BANKING MARKET MARKET WITH A CONTINUED GROWTH POTENTIAL Healthy competitive structure Solid risk indicators % 2016 2017 Loan / Deposit Ratio 78.3 73.8 CT1 Ratio 17.4 18.1 Total Capital Ratio 18.5 19.3 FX loans /Total loans 19.6 18.9 Defaulted / Total credit exposures 4.6 3.7 Business lending s
Slide 39: Macroeconomic environment – Czech Republic
MACROECONOMIC ENVIRONMENT – CZECH REPUBLIC Macroeconomic Indicators 2015 2016 2017 2018* 2019* Real GDP (%, average) 5.4 2.5 4.6 3.8 2.7 Inflation (%, average) 0.3 0.7 2.5 1.9 2.1 Household consumption (%, average) 3.8 3.6 4.0 4.0 2.8 Unemployment (%, av., MLSA meth.) 6.4 5.4 4.1 3.1 3.1 M2 (%, aver
Slide 40: Interest rates evolution
INTEREST RATES EVOLUTION (for the period 1 January 2006 – 29 March 2018) KB GROUP AS OF 31 MARCH 2018 07 MAY 2018 40
Slide 41: KB #1 listed Czech bank
KB SHARES AND SHAREHOLDERS KB #1 LISTED CZECH BANK As of 31 March 2018 Development of KB share price and PX index (1 January 2006 – 29 March 2018) The number of shareholders comprised 47,959 corporate entities and private individuals. Of the Bank’s total share capital of CZK 19,004,926,000 divided i
Slide 42: Your investor relations contacts
YOUR INVESTOR RELATIONS CONTACTS @ KB Jakub Černý, Renata Swaczynová, Marcela Ondrušová Tel.: +420 955 532 156, 955 532 155, 955 532 734 E-mail: investor_relations@kb.cz - Internet: www.kb.cz