Komercni Banka, A.s. · PSECZ:KOMB
Komercni Banka, A.s — FY2021 Earnings Presentation
41 slides from Komercni Banka, A.s's earnings presentation, Feb 10, 2022
Slide 1: KB Group Results as of 31 Dec 2021
PRAGUE, 10 FEBRUARY 2022 KB GROUP RESULTS AS OF 31 DEC 2021 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 as of 31 December 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2022 Appendix KB GROUP AS OF 31 DECEMBER 2021│ 10 FEBRUARY 2022 │ 3
Slide 4: Highlights as of 31 December
HIGHLIGHTS AS OF 31 DECEMBER • KB Change 2025 transformation running: New digital bank testing launched; client satisfaction improved to 39 NPS among individual clients, 41 small businesses, 45 in corporate segments, employee engagement at 77% • Total loan portfolio expanded by 6.9% YoY to CZK 738.9
Slide 5: Contents
CONTENTS Highlights as of 31 December 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2022 Appendix KB GROUP AS OF 31 DECEMBER 2021│ 10 FEBRUARY 2022 │ 5
Slide 6: Inflation before peaking, economy to accelerate on easing supply difficulties
INFLATION BEFORE PEAKING CZECH ECONOMY ECONOMY TO ACCELERATE ON EASING SUPPLY DIFFICULTIES • GDP in 4Q 2021 0.9% QoQ and 3.6% YoY, totalling at 3.3% for 2021. In 2022, Czech GDP growth (%, YoY)3 Czech economy expected to grow by 4.9% driven by net exports, fixed 10 3.3 4.9 investments and household
Slide 7: COVID-19 Pandemic Update
COVID-19 COVID-19 PANDEMIC UPDATE Czech Daily Incidence rate (smoothed, per 1M) Pandemic situation: Currently high incidence dynamics of Omicron variant. Health care 4,000 system coping well thanks to sufficient vaccination (63.5% of population fully vaccinated and 34.9% with booster vaccine) and
Slide 8: Contents
CONTENTS Highlights as of 31 December 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2022 Appendix KB GROUP AS OF 31 DECEMBER 2021│ 10 FEBRUARY 2022 │ 8
Slide 9: Faster shift towards mobile payments
DIGITAL & INNOVATIONS FASTER SHIFT TOWARDS MOBILE PAYMENTS New releases in 4Q21 Mobile banking – volume of payments Mobile banking and KB Key BankID Sign – guaranteed digital signature of documents (CZK billion per month) penetration (in thousands) 1,200 1,034,000; 63.6% Sustainable e-shop – label f
Slide 10: Gross lending up 6.9% YoY
LOANS TO CLIENTS GROSS LENDING UP 6.9% YOY Group lending (w/o repo, but incl. client bonds) CZK billion Group business and other loans CZK billion +6.9% (w/o repo, but incl. client bonds) 1.9% +5.0% YoY +1.6% 708.1 724.8 738.9 692.3 691.4 694.7 61.7 63.9 66.1 69.0 72.5 76.0 +18.9% YoY 355.2 349.4 34
Slide 11: Selected deals of the 4Q 2021
SELECTED DEALS SELECTED DEALS OF THE 4Q 2021 MANUFACTURING METAL INDUSTRY REAL ESTATE Rubena, s.r.o. AL INVEST Břidličná, a.s. Prague CBD, s.r.o. Syndicated Term and Revolving Facilities Club Financing Real Estate Financing EUR 26,000,000 CZK 1,350,000,000 EUR 108,700,000 Facility Coordinator, Arran
Slide 12: Client deposits up by 6.2% YoY, other AUM +7.0%
DEPOSITS AND OTHER AUM CLIENT DEPOSITS UP BY 6.2% YOY, OTHER AUM +7.0% GROUP DEPOSITS (excluding repo operations)LIENT NON-BANK ASSETS UNDER MANAGEMENTLIENT +6.2% CZK billion -9.1% CZK billion +7.0% YoY YoY 985.7 996.9 1,043.1 199.5 203.6 930.4 893.0 948.6 188.0 190.3 192.2 196.3 60.5 60.5 60.4 +0.2
Slide 13: Contents
CONTENTS Highlights as of 31 December 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2022 Appendix KB GROUP AS OF 31 DECEMBER 2021│ 10 FEBRUARY 2022 │ 13
Slide 14: Rising revenues, flat costs, lower provision charges
R E C O N C I L I A T I PORNO O F IFT I & N CLOOMS E S RISING REVENUES, FLAT COSTS, LOWER PROVISION CHARGES Drivers for year on year change in attributable net profit Development of quarterly net profit and its drivers (as of 31 December 2021) +101% +56.0% +21.5% 3,847 189 12,727 4,169 1,646 2,074 1
Slide 15: Expanded client deposits and equity reinvested in loans and securities
EXPANDED CLIENT DEPOSITS AND EQUITY STATEMENT OF FINANCIAL POSITION REINVESTED IN LOANS AND SECURITIES Assets Liabilities and Equity CZK billion CZK billion 6.6% 6.6% YoY YoY 1,244 1,244 1,167 1,167 83 287 +0.3% 87 -3.7% 286 957 +5.6% 725 906 680 +6.6% 2 14 159 191 +20.1% 3 54 1 61 42 42 117 127 +8.
Slide 16: Strong solvency ratios
CAPITAL, RWA STRONG SOLVENCY RATIOS Contributions to capital adequacy ratio in 2021 (%) Contributions to equity in 2021 (CZK million) -103 bps 22.34 1,473 30 126,782 -4,506 -1.26 0.80 21.31 12,727 117,058 -0.27 -0.30 0.00 31 Dec RWA RWA Interim Retained OCI & 31 Dec 1 Jan 2021 YtD profit Dividends R
Slide 17: Interest income recovering
NET INTEREST INCOME INTEREST INCOME RECOVERING +22.6% Net interest margin (%) QtD NII +19.6% YtD 2.09% 1.93% 6,448 1.80% 1.96% 1.85% 2.03% 1.73% 1.73% 1.60% 1.70% 1.68% 1.70% 332 5,256 5,261 5,390 5,004 4,953 229 248 242 276 291 3,049 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 2,526 2,433 2,355
Slide 18: Broad-based recovery in fees
NET FEES AND COMMISSIONS BROAD-BASED RECOVERY IN FEES +14.4% NFC ▪ Transaction fees – increasing numbers of card, non-cash, out- +12.2% of-branch transactions. Continuing drop in cash transactions. 1,544 1,350 1,374 1,418 1,376 More payments included in price of some packages since 2020 1,234 441 34
Slide 19: Demand reflecting evolving market conditions
NET PROFIT FROM FINANCIAL OPERATIONS DEMAND REFLECTING EVOLVING MARKET CONDITIONS NPFO +1.4% ▪ High client FX hedging activity in FX throughout the year -32.5% 1,002 1,000 ▪ Hedging of interest rate risk affected in 4Q21 by sharp rise in 953 710 675 rates 666 591 687 588 353 245 288 ▪ Result support
Slide 20: Strong cost discipline vis-a-vis inflation and increased regulatory charges
STRONG COST DISCIPLINE OPERATING EXPENDITURES VIS-A-VIS INFLATION AND INCREASED REGULATORY CHARGES Average number of employees (quarterly) +5.1% OPEX 4Q21/4Q20 +6.3% -4.0% 7,997 7,949 7,820 7,676 7,621 7,635 4Q21/3Q21 -1,927 -1,836 -1,824 -1,843 -1,933 -1,939 +0.2% 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q
Slide 21: Contents
CONTENTS Highlights as of 31 December 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2022 Appendix KB GROUP AS OF 31 DECEMBER 2021│ 10 FEBRUARY 2022 │ 21
Slide 22: 4Q 2021 Asset Quality
LOAN PORTFOLIO QUALITY 4Q 2021 ASSET QUALITY Gross lending CZK billion ▪ Loan portfolio up 6.9% YoY and 1.9% QoQ ▪ Stable credit risk profile • NPL ratio down to 2.5%, driven by low default intensity and strong recoveries on all segments • Stage 2 ratio up to 7.8%, reflecting one adjustment to the I
Slide 23: 4Q 2021 Cost of Risk Development
COST OF RISK 4Q 2021 COST OF RISK DEVELOPMENT Total Cost of Risk (Year-to-date, in basis points) ▪ 4Q 2021 CoR net creation at CZK -12 million 91 99 71 74 68 68 ▪ CZK 197 million in net release from IFRS9 statutory recalibrations 52 34 47 38 49 50 43 19 • Incorporation of latest macroeconomic foreca
Slide 24: Contents
CONTENTS Highlights as of 31 December 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2022 Appendix KB GROUP AS OF 31 DECEMBER 2021│ 10 FEBRUARY 2022 │ 24
Slide 25: Return to sustainable payout policy, capital surplus to be addressed from 2H-22
RETURN TO SUSTAINABLE PAYOUT POLICY DIVIDENDS CAPITAL SURPLUS TO BE ADRESSED FROM 2H-22 ▪ KB’s total capital adequacy at 21.3%, not including profit generated in 2021, continues to exceed significantly the Overall Capital Requirement applicable currently (15.2%) as well as Dividend history (Dividend
Slide 26: Baseline outlook for 2022
OUTLOOK FOR 2022 BASELINE OUTLOOK FOR 2022 Investors are advised to consider higher than usual level of uncertainty and risks Macroeconomic • Czech economy expected to grow by 4.9% on easing supply shortages and pandemic restrictions. Average assumptions consumer price inflation expected to reach 8.
Slide 27: Contents
CONTENTS Highlights as of 31 December 2021 Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Capital, dividends, and outlook for 2022 Appendix KB GROUP AS OF 31 DECEMBER 2021│ 10 FEBRUARY 2022 │ 27
Slide 28: Number of clients and distribution network
KB GROUP CLIENTS AND DISTRIBUTION NETWORK NUMBER OF CLIENTS AND DISTRIBUTION NETWORK 2020 2021 YoY Number of bank clients (thousands, CZ) Number of clients 1,654 1,664 1,667 1,664 1,641 1,625 1) KB Group's clients 2,293,000 2,251,000 -43,0001), 2) 1) Komerční banka 1,641,000 1,625,000 -17,000 1) – i
Slide 29: Income statement
CONSOLIDATED INCOME STATEMENT INCOME STATEMENT Profit and Loss Statement Reported Change (CZK million, unaudited) FY 2020 FY 2021 YoY Net interest income 21,360 21,795 2.0% Net fee & commission income 5,210 5,711 9.6% Net profit of financial operations 2,884 3,630 25.9% Dividend and other income 210
Slide 30: Quarterly income statement
CONSOLIDATED INCOME STATEMENT – QUARTERLY VIEW QUARTERLY INCOME STATEMENT Profit and Loss Statement Reported Change Change (CZK million, unaudited) 4Q 2020 3Q 2021 4Q 2021 YoY QoQ Net interest income 5,261 5,390 6,448 22.6% 19.6% Net fee & commission income 1,350 1,376 1,544 14.4% 12.2% Net profit o
Slide 31: Balance sheet
CONSOLIDATED STATEMENT OF FINANCIAL POSITION BALANCE SHEET Balance Sheet 31 Dec 31 Dec YoY YoY (CZK million, unaudited) 2020 2021 rel. abs. Assets 1,167,131 1,244,353 6.6% 77,222 Cash and current balances with central bank 23,547 29,947 27.2% 6,400 Loans and advances to banks 262,606 257,196 -2.1% -
Slide 32: Capital & profitability indicators
FINANCIAL RATIOS CAPITAL & PROFITABILITY INDICATORS Reported (year-to-date, IFRS 9) 31/12/2020 31/12/2021 Capital adequacy 22.3% 21.3% Tier 1 ratio = Core Tier 1 ratio 21.7% 20.9% Risk weighted assets for credit risk (CZK billion) 375.9 400.2 Net interest margin, annualised 2.0% 1.9% Loan (net) / de
Slide 33: FY 2021 cost of risk structure
APPENDIX - COMPOSITION OF FY 2021 COST OF RISK FY 2021 COST OF RISK STRUCTURE Key components Contribution to FY 2021 CoR Corporate NPL portfolio 7 bps Corporate performing portfolio (Stages 1 & 2) 9 bps Retail NPL portfolio 0 bps Retail performing portfolio (Stages 1 & 2) -2 bps IFRS9 models recalib
Slide 34: Lending with state Covid guarantee
LENDING WITH GUARANTEES LENDING WITH STATE COVID GUARANTEE As of 31 December 2021 Outstanding Signed exposure* GUARANTEED COVID LENDING No. of clients (CZK million) (CZK million) Covid II 920 3,996 3,087 Covid Prague 63 374 213 Covid III 2,608 18,048 15,702 Covid Plus 23 3,390 2,945 Total 3,614 25,8
Slide 35: Business performance of subsidiaries 1/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 1/2 FY 2020 FY 2021 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 18,767 35,695 90% Volume of total loans (gross, CZK million) 63,938 76,030 19% Volume of deposits (CZK million) 60,775
Slide 36: Business performance of subsidiaries 2/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 2/2 FY 2020 FY 2021 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 49,849 63,283 27% Volume of total financing (gross, CZK million) 8,309 11,392 37% Average number of FTEs 42 41 -2% Komerční
Slide 37: Debt securities portfolio in the banking book
SECURITIES DEBT SECURITIES PORTFOLIO IN THE BANKING BOOK CZK billion 147.6 128.8 112.1 88.6 Slovakia 5.5 135.3 12.3 6.8 Poland 0.1 40.2 35.5 Czech government bonds 31/12/2020 31/12/2021 Foreign government bonds Debt securities at amortized cost Corporations Debt securities at FV through OCI Note: De
Slide 38: 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 3.3 4.9 2.7 Inflation (%, average) 0.7 2.5 2.1 2.8 3.2 3.8 8.8 1.9 Household consumption (%, average)* 3.7 4.1 3.3 2.6 -7.1 4.9 3.9 1.7 Unemployment (%, a
Slide 39: Interest rates evolution
INTEREST RATES EVOLUTION For the period 1 Jan 2015 – 4 February 2021 KB GROUP AS OF 31 DECEMBER 2021│ 10 FEBRUARY 2022 │ 39
Slide 40: KB #1 listed Czech bank
KB #1 LISTED CZECH BANK Development of KB share price and PX index (1 January 2001 – 4 February 2022) Shareholder structure Free-float 39.6% Société Générale 60.4% • The number of shareholders comprised 58,444 corporate entities and private individuals. • Of the Bank’s total share capital of CZK 19,
Slide 41: 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 31 DECEMBER 2021│ 10 FEBRUARY 2022