Komercni Banka, A.s. · PSECZ:KOMB
Komercni Banka, A.s — Q3 2021 Earnings Presentation
49 slides from Komercni Banka, A.s's earnings presentation, Nov 4, 2021
Slide 1: KB Group Results as of 30 Sept 2021 and KB Change 2025 Implementation
PRAGUE, 4 NOVEMBER 2021 KB GROUP RESULTS AS OF 30 SEPT 2021 AND STATUS OF KB CHANGE 2025 IMPLEMENTATION According to IFRS, Consolidated, Unaudited
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: Contents
CONTENTS Highlights of 9M 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 KB Change 2025 Year 1 delivery Appendix KB GROUP AS OF 30 SEPTEMBER 2021│ 4 NOVEMBER 2021 │ 3
Slide 4: Highlights as of 30 September
HIGHLIGHTS AS OF 30 SEPTEMBER Komerční banka – delivering on strategy, rebounding from the pandemic hit Non-bank Loans (gross) * Client deposits * assets under management CZK 724.8 bil./ +4.7% YoY CZK 1,043.1 bil. / +12.1% YoY CZK 199.5 bil. / +6.1% YoY Revenues Operating expenses Cost of Risk CZK 2
Slide 5: Contents
CONTENTS Highlights of 9M 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 KB Change 2025 Year 1 delivery Appendix KB GROUP AS OF 30 SEPTEMBER 2021│ 4 NOVEMBER 2021 │ 5
Slide 6: Ongoing rates normalisation, supply chain issues weigh on growth and inflation
ONGOING RATES NORMALISATION CZECH ECONOMY SUPPLY CHAIN ISSUES WEIGH ON GROWTH AND INFLATION • GDP in 3Q 2021 +1.4% QoQ and +2.8% YoY driven by private consumption Czech GDP growth (%, yoy)3 and fixed investments. In 2021, Czech economy expected to grow by 1.9%, to be driven by household consumption
Slide 7: COVID-19 pandemic update
COVID-19 COVID-19 PANDEMIC UPDATE Increased incidence in October, containment measures not too intrusive so far Czech Daily Incidence rate (smoothed, per 1M) Pandemic situation: Worsening in October after calm situation during summer months, with end-of-October weekly incidence rate at 320.5. As o
Slide 8: Contents
CONTENTS Highlights of 9M 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 KB Change 2025 Year 1 delivery Appendix KB GROUP AS OF 30 SEPTEMBER 2021│ 4 NOVEMBER 2021 │ 8
Slide 9: 1,000,000 mobile banking clients mark exceeded
DIGITAL & INNOVATIONS 1,000,000 MOBILE BANKING CLIENTS MARK EXCEEDED New Digital Bank Mobile banking – volume of payments Mobile banking and KB Key Drop 1 with basic functions and 500 users launched October ‘21 (CZK billion per month) penetration (in ths) 1,200 1,008,000; 62.1% 25 3Q 2021 CZK 70.0 b
Slide 10: Gross lending excluding repo up 4.7% YoY
LOANS TO CLIENTS GROSS LENDING EXCLUDING REPO UP 4.7% YOY Group lending (w/o repo, but incl. client bonds) CZK billion Group business and other loans CZK billion +4.7% (w/o repo, but incl. client bonds) +2.4% +1.6% YoY +2.2% 692.3 691.4 694.7 708.1 724.8 676.2 59.4 61.7 63.9 66.1 69.0 72.5 +17.4% Yo
Slide 11: Selected deals of the 3Q 2021
SELECTED DEALS SELECTED DEALS OF THE 3Q 2021 REAL ESTATE MACHINERY MEDIA AND TELECOMMUNICATION TELECOMMUNICATION METALURGY CTPark Ostrava, spol. s r.o., Rhapsody III AGROSTROJ Pelhřimov, a.s. CETIN GROUP N.V. SWAN, a.s., SWAN Mobile, a.s. U.S. Steel Košice, s.r.o. CTP N.V. Real Estate Financing Unse
Slide 12: Client deposits up by 12.1% YoY, other AUM +6.1%
DEPOSITS AND OTHER AUM CLIENT DEPOSITS UP BY 12.1% YOY, OTHER AUM +6.1% GROUP DEPOSITS (excluding repo operations)LIENT NON-BANK ASSETS UNDER MANAGEMENTLIENT +12.1% CZK billion +4.6% CZK billion +6.1% YoY YoY 985.7 996.9 1,043.1 196.3 199.5 898.4 930.4 893.0 +0.6% 186.3 188.0 190.3 192.2 60.5 60.5 6
Slide 13: Contents
CONTENTS Highlights of 9M 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 KB Change 2025 Year 1 delivery Appendix KB GROUP AS OF 30 SEPTEMBER 2021│ 4 NOVEMBER 2021 │ 13
Slide 14: Profitability recovering from pandemic hit
R E C O N C I L I A T IPORNO O F IFT I & N CLOOM SSE PROFITABILITY RECOVERING FROM PANDEMIC HIT Drivers for year on year change in attributable net income (as of 30 September 2021) +40.7% 8,557 2,688 -34 -540 6,082 307 178 -752 727 -99 Reported NII NFC NPFO & Regulatory OPEX CoR Other* Tax Reported
Slide 15: Balance sheet growth driven by client deposits and retained earnings
BALANCE SHEET GROWTH DRIVEN BY STATEMENT OF FINANCIAL POSITION CLIENT DEPOSITS AND RETAINED EARNINGS Assets +9.1% Liabilities and Equity CZK billion CZK billion +9.1% +18.1% +18.1% YoY YoY 1,379 1,264 1,379 1,167 1,264 90 454 +25.3% 106 1,167 -14.6% 362 87 286 1,094 +13.2% +3.8% 966 906 684 680 710
Slide 16: Strong capital above target
CAPITAL, RWA STRONG CAPITAL ABOVE TARGET Contributions to capital adequacy ratio in 2021 (%) Contributions to equity in 2021 (CZK million) +67 bps 1,358 200 127,173 23.01 22.34 -0.16 8,557 -0.70 1.80 117,058 -0.27 0.00 31 Dec RWA RWA Interim Retained OCI & 30 Sep 1 Jan 2021 YtD profit Revaluations*
Slide 17: Interest income recovering
NET INTEREST INCOME INTEREST INCOME RECOVERING +2.5% Net interest margin (%) QtD NII +8.8% YtD 5,256 5,262 5,390 2.00% 1.80% 1.96% 1.85% 2.03% 4,998 5,004 4,953 370 1.73% 1.73% 1.73% 1.60% 1.70% 1.68% 1.70% 315 365 339 326 343 2,474 2,476 2,409 2,285 2,239 2,158 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 20
Slide 18: Fee income driven by cross-selling, DCM services
NET FEES AND COMMISSIONS FEE INCOME DRIVEN BY CROSS-SELLING, DCM SERVICES NFC +11.5% ▪ Transaction fees – rebound in activity since 2Q21 in card, non- -3.0% 1,418 cash, non-branch transactions 1,273 1,350 1,374 1,376 1,234 345 406 414 425 ▪ Deposit product fees – reflecting number of accounts, clien
Slide 19: Supportive market conditions
NET PROFIT FROM FINANCIAL OPERATIONS SUPPORTIVE MARKET CONDITIONS NPFO +40.8% ▪ Higher client activity in IR and FX hedging driven by evolving CZK +4.9% rates expectations, and KB’s appropriate offer of hedging 1,002 1,000 920 953 strategies 710 666 591 652 687 588 ▪ Solid turnover on CZGB secondary
Slide 20: Tight control of operating costs
OPERATING EXPENDITURES TIGHT CONTROL OF OPERATING COSTS Average number of employees (quarterly) +1.1% OPEX 3Q21/3Q20 +0.9% -4.7% 8 8,128 7,997 7,949 7,820 7,676 7,621 3Q21/2Q21 -1,947 -1,927 -1,836 -1,824 -1,843 -1,933 -0.7% 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 -951 -878 -952 -816 -923 -8
Slide 21: Contents
CONTENTS Highlights of 9M 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 KB Change 2025 Year 1 delivery Appendix KB GROUP AS OF 30 SEPTEMBER 2021│ 4 NOVEMBER 2021 │ 21
Slide 22: 3Q 2021 asset quality
LOAN PORTFOLIO QUALITY 3Q 2021 ASSET QUALITY Gross lending CZK billion ▪ Loan exposure up 4.2 % YoY and 2.4% QoQ ▪ Stable credit risk profile of KB loan portfolio • NPL share down to 2.7% (QoQ down by 0.2%) • Stage 2 share down to 5.8% (QoQ down by 0.5%) Provision coverage CZK million ▪ Stable provi
Slide 23: 3Q cost of risk development
COST OF RISK 3Q COST OF RISK DEVELOPMENT Total Cost of Risk (Year-to-date, in basis points) ▪ 3Q 2021 CoR net creation at CZK 51 million 91 99 71 74 68 68 ▪ CZK 149 million created on corporate porfolios 38 52 34 47 • New CoR creation concentrated on one client situation 38 50 43 7 19 14 0 • Continu
Slide 24: Contents
CONTENTS Highlights of 9M 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 KB Change 2025 Year 1 delivery Appendix KB GROUP AS OF 30 SEPTEMBER 2021│ 4 NOVEMBER 2021 │ 24
Slide 25: Baseline outlook for 2021 (update as of October)
OUTLOOK FOR 2021 BASELINE OUTLOOK FOR 2021 (UPDATE AS OF OCTOBER) Investors are advised to consider higher than usual level of uncertainty and risks Macroeconomic • Czech economy expected to grow by only 2% due to supply shortages and production outages in assumptions automotive sector. Growth to be
Slide 26: Contents
CONTENTS Highlights of 9M 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 KB Change 2025 Year 1 delivery Appendix KB GROUP AS OF 30 SEPTEMBER 2021│ 4 NOVEMBER 2021 │ 26
Slide 27: KB Change 2025 strategic framework
KB CHANGE 2025 STRATEGIC FRAMEWORK “Building together with our clients a better and sustainable future through Purpose responsible and innovative financial solutions.” Vision “Leader in new era of banking, for 2 million active clients.” Pillars Growth Helpfulness Responsibility ▪ Digital bank for pe
Slide 28: Deliveries in first 12 months of KB Change 2025 plan
DELIVERIES IN FIRST 12 MONTHS OF KB CHANGE 2025 PLAN ▪ New digital bank – based on Temenos Transact core banking Drop 1 with basic DIGITAL BANK FOR PEOPLE functions and 500 users launched October 2021 WITH ASPIRATIONS ▪ New branch concept introduced with a first outlet in July 2021 ▪ Share of E2E di
Slide 29: Deliveries in first 12 months of KB Change 2025 plan
DELIVERIES IN FIRST 12 MONTHS OF KB CHANGE 2025 PLAN ▪ 2020 carbon emissions down 35% to 25,050 tonnes CO2 eq. (15.2 kg per client) ENVIRONMENT, SOCIETY, ▪ New sustainable positive impact financing of CZK 3.2 billion over last 12 months. GOVERNANCE Gradual withdrawal from coal financing ▪ New retail
Slide 30: New digital bank – minimum viable bank launched
NEW DIGITAL BANK – MINIMUM VIABLE BANK LAUNCHED New digital bank means a greenfield initiative and overhaul of banking processes – client facing as well as internal New front-end New simple ▪ Omnichannel with mobile first approach, 200 branches (80 in new layout) digital New IT products infrastructu
Slide 31: Delivery of operational targets on track in spite of COVID-19 disruption
DELIVERY OF OPERATIONAL TARGETS ON TRACK IN SPITE OF COVID-19 DISRUPTION MAIN OPERATIONAL TARGETS * 2019 SEP-2021 TARGET 2025 CLIENT SATISFACTION (NPS) ▪ Retail NPS growing driven by high satisfaction with – INDIVIDUALS 32 37 50 digital channels and significantly improved perception – SMALL BUSINESS
Slide 32: Confirmed growth and financial targets for 2025
CONFIRMED GROWTH AND FINANCIAL TARGETS FOR 2025 ▪ Dynamic growth of revenues from 2022 after pandemic-induced trough to be driven by rising business volumes, digital sales, advisory model supported by data analytics and new sources of revenues, and underpinned by faster normalisation of interest rat
Slide 33: Contents
CONTENTS Highlights of 9M 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2021 KB Change 2025 Year 1 delivery Appendix KB GROUP AS OF 30 SEPTEMBER 2021│ 4 NOVEMBER 2021 │ 33
Slide 34: Number of clients and distribution network
KB GROUP CLIENTS AND DISTRIBUTION NETWORK NUMBER OF CLIENTS AND DISTRIBUTION NETWORK 3Q 2020 3Q 2021 YoY Number of bank clients (thousands, CZ) Number of clients 1), 2) 1,654 1,664 1,667 1,664 1,641 1,623 1) KB Group's clients 2,299,000 2,237,000 -62,000 1) Komerční banka 1,651,000 1,623,000 -27,000
Slide 35: Income statement
CONSOLIDATED INCOME STATEMENT INCOME STATEMENT Profit and Loss Statement Reported Change (CZK million, unaudited) 9M 2020 9M 2021 YoY Net interest income 16,099 15,347 -4.7% Net fee & commission income 3,860 4,167 8.0% Net profit of financial operations 2,218 2,954 33.2% Dividend and other income 16
Slide 36: Quarterly income statement
CONSOLIDATED INCOME STATEMENT – QUARTERLY VIEW QUARTERLY INCOME STATEMENT Profit and Loss Statement Reported Change Change (CZK million, unaudited) 3Q 2020 2Q 2021 3Q 2021 YoY QoQ Net interest income 5,256 4,953 5,390 2.5% 8.8% Net fee & commission income 1,234 1,418 1,376 11.5% -3.0% Net profit of
Slide 37: Balance sheet
CONSOLIDATED STATEMENT OF FINANCIAL POSITION BALANCE SHEET Balance Sheet 30 Sep 31 Dec 30 Sep YoY YoY Ytd Ytd (CZK million, unaudited) 2020 2020 2021 rel. abs. rel. abs. Assets 1,263,532 1,167,131 1,378,937 9.1% 115,405 18.1% 211,806 Cash and current balances with central bank 47,764 23,547 79,070 6
Slide 38: Capital & profitability indicators
FINANCIAL RATIOS CAPITAL & PROFITABILITY INDICATORS Adjusted for IFRIC 21 Reported linearisation* (year-to-date, IFRS 9) 30/09/2020 31/12/2020 30/09/2021 30/09/2020 30/09/2021 Capital adequacy 21.6% 22.3% 23.0% Tier 1 ratio = Core Tier 1 ratio 20.9% 21.7% 22.5% Risk weighted assets for credit risk (
Slide 39: YtD 3Q 2021 cost of risk structure
APPENDIX - COMPOSITION OF YtD 3Q21 COST OF RISK YTD 3Q 2021 COST OF RISK STRUCTURE Key components Contribution to YtD 3Q 2021 CoR Corporate NPL portfolio 8 bps Corporate performing portfolio (Stages 1 & 2) 7 bps Retail NPL portfolio 2 bps Retail performing portfolio (Stages 1 & 2) -2 bps IFRS9 model
Slide 40: Terminated loan moratorium portfolios
APPENDIX - LOAN MORATORIA TERMINATED LOAN MORATORIUM PORTFOLIOS Total moratorium o.w. defaulted % of defaulted o.w. non-defaulted % of non-defaulted CZK billion exposure exposure exposure exposure with DPD >10 exposure with DPD >10 Corporates 24.0 2.9 12.1% 0.6 2.6% Mortgages 27.3 1.6 5.7% 0.1 0.5%
Slide 41: Stage 2 exposure evolution
APPENDIX - STAGE 2 EXPOSURES STAGE 2 EXPOSURE EVOLUTION ▪ Lower Stage 2 share (from 6.3% to 5.8% QoQ) • Driven by both corporate and retail portfolios ▪ Stable Stage 2 provision coverage ratio at around 5.5% • Prudent provisions of selected Covid-sensitive portfolios • Prudent approach to IFRS9 macr
Slide 42: Lending with state Covid guarantee
LENDING WITH GUARANTEES LENDING WITH STATE COVID GUARANTEE As of 30 September 2021 Outstanding Signed exposure* GUARANTEED COVID LENDING No. of clients (CZK million) (CZK million) Covid II 920 3,999 3,291 Covid Prague 64 380 255 Covid III 2,426 16,714 14,998 Covid Plus 21 3,114 2,847 Total 3,431 24,
Slide 43: Business performance of subsidiaries 1/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 1/2 9M 2020 9M 2021 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 13,265 26,268 98% Volume of total loans (gross, CZK million) 61,744 72,462 17% Volume of deposits (CZK million) 59,980
Slide 44: Business performance of subsidiaries 2/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 2/2 9M 2020 9M 2021 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 35,475 43,604 23% Volume of total financing (gross, CZK million) 7,379 8,890 20% Average number of FTEs 42 41 -3% Komerční p
Slide 45: Debt securities portfolio in the banking book
SECURITIES DEBT SECURITIES PORTFOLIO IN THE BANKING BOOK CZK billion 143.9 128.8 106.2 88.6 128.3 Slovakia 5.8 12.7 7.0 Poland 2.6 0.3 40.2 37.7 31/12/2020 30/09/2021 Debt securities at amortized cost Czech government bonds Debt securities at FV through OCI Foreign government bonds Bonds of fin.inst
Slide 46: Macroeconomic environment – Czechia
MACROECONOMIC ENVIRONMENT – CZECHIA Macroeconomic Indicators 2016 2017 2018 2019 2020 2021* 2022* 2023* Real GDP (%, average) 2.4 5.4 3.2 3.0 -5.8 1.9 3.5 4.0 Inflation (%, average) 0.7 2.5 2.1 2.8 3.2 3.6 4.8 2.8 Household consumption (%, average) 3.7 4.1 3.3 2.6 -7.1 2.7 4.6 2.2 Unemployment (%, a
Slide 47: Interest rates evolution
INTEREST RATES EVOLUTION For the period 1 Jan 2015 – 29 October 2021 KB GROUP AS OF 30 SEPTEMBER 2021│ 4 NOVEMBER 2021 │ 47
Slide 48: KB #1 listed Czech bank
KB #1 LISTED CZECH BANK Development of KB share price and PX index (1 January 2001 – 29 October 2021) Shareholder structure Free-float 39.6% Société Générale 60.4% • The number of shareholders comprised 57,851 corporate entities and private individuals. • Of the Bank’s total share capital of CZK 19,
Slide 49: Investor Relations
INVESTOR RELATIONS Komerční banka, a.s. Na Příkopě 33, 114 07 Prague 1 Email: investor_relations@kb.cz Tel.: +420 955 532 156, +420 955 532 155, +420 955 532 734 Internet: www.kb.cz/investors Twitter: @KB_investors Reuters: BKOM.PR Bloomberg: KOMB CP KB GROUP AS OF 30 SEPTEMBER 2021│ 4 NOVEMBER 2021