Komercni Banka, A.s. · PSECZ:KOMB

Komercni Banka, A.s — Q3 2018 Earnings Presentation

35 slides from Komercni Banka, A.s's earnings presentation, Nov 8, 2018

  1. Slide 1: Komerční banka Group Financial results as of 30 September 2018

    Komerční banka Group Financial results as of 30 September 2018 ACCORDING TO INTERNATIONAL FINANCIAL REPORTING STANDARDS, CONSOLIDATED, UNAUDITED PRAGUE, 8 NOVEMBER 2018

  2. 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

  3. Slide 3: Agenda

    AGENDA  MACROECONOMIC ENVIRONMENT  HIGHLIGHTS OF KB’s PERFORMANCE  BUSINESS PERFORMANCE  FINANCIAL PERFORMANCE  ASSET QUALITY & COST OF RISK  APPENDIX KB GROUP AS OF 30 SEPTEMBER 2018 08 NOVEMBER 2018 3

  4. Slide 4: Growth of the economy reliant on productivity gains

    ECONOMY OF THE CZECH REPUBLIC GROWTH OF THE ECONOMY RELIANT ON PRODUCTIVITY GAINS  GDP in 2Q18 up +2.4% YoY, +0.7% QoQ. Growth driven by Real GDP outlook (YoY, %) household consumption and private sector investments  Unemployment low at 2.3% in September1, nominal wages up 8.6% in 2Q 2018  Higher

  5. Slide 5: Agenda

    AGENDA  MACROECONOMIC ENVIRONMENT  HIGHLIGHTS OF KB’s PERFORMANCE  BUSINESS PERFORMANCE  FINANCIAL PERFORMANCE  ASSET QUALITY & COST OF RISK  APPENDIX KB GROUP AS OF 30 SEPTEMBER 2018 08 NOVEMBER 2018 5

  6. Slide 6: KB in 3Q 2018: strong financial result, adoption of change

    QUARTERS’ HIGHLIGHTS KB IN 3Q 2018: STRONG FINACIAL RESULT, ADOPTION OF CHANGE Growth in the number of clients with KB Mobilní banka even accelerated Mobile banking clients +169,000 YoY to 570,000 Total number of KB Bank and Group clients on the rise. KB Group serving 2.4 million clients KB bank cus

  7. Slide 7: Strong discipline in implementing strategic transformation

    KB CHANGE STRONG DISCIPLINE IN IMPLEMENTING STRATEGIC TRANSFORMATION Account aggregation in internet and mobile KB Key mobile app – access to Mojebanka banking from November internet banking from any computer Mutumutu – fully online life insurance Pricelist shortened by one-half Deposit-taking ATMs

  8. Slide 8: Agenda

    AGENDA  MACROECONOMIC ENVIRONMENT  HIGHLIGHTS OF KB’s PERFORMANCE  BUSINESS PERFORMANCE  FINANCIAL PERFORMANCE  ASSET QUALITY & COST OF RISK  APPENDIX KB GROUP AS OF 30 SEPTEMBER 2018 08 NOVEMBER 2018 8

  9. Slide 9: Selected deals of the third quarter of 2018

    SELECTED DEALS SELECTED DEALS OF THE THIRD QUARTER OF 2018 KB GROUP AS OF 30 SEPTEMBER 2018 08 NOVEMBER 2018 9

  10. Slide 10: Continued intense competition on the market

    LOANS TO CLIENTS CONTINUED INTENSE COMPETITION ON THE MARKET  Gross loans +3.8% YoY, +0.6% QoQ to CZK 628.6 billion Group lending (including repo, incl. client bonds) (excluding repo operations but including Debt securities CZK billion issued by KB’s corporate clients). 625.8 628.3 635.2 640.7 615.

  11. Slide 11: Faster growth in retail and in term deposits

    DEPOSITS AND OTHER ASSETS UNDER MANAGEMENT FASTER GROWTH IN RETAIL AND IN TERM DEPOSITS CZK billion Group deposits (incl. repo operations)850.9  Standard Group deposits (excluding repo) up +4.1% 797.1 814.7 832.0 781.9 762.0 YoY to CZK 809.5 billion, +0.4% QoQ 61.6 61.3 61.1 62.6 62.5 62.7 258.0 26

  12. Slide 12: Agenda

    AGENDA  MACROECONOMIC ENVIRONMENT  HIGHLIGHTS OF KB’s PERFORMANCE  BUSINESS PERFORMANCE  FINANCIAL PERFORMANCE  ASSET QUALITY & COST OF RISK  APPENDIX KB GROUP AS OF 30 SEPTEMBER 2018 08 NOVEMBER 2018 12

  13. Slide 13: Improved recurring profitability

    RECONCILIATION OF INCOME IMPROVED RECURRING PROFITABILITY Drivers for year on year change in attributable net income (as of 30 September 2018) -2.4% 11,225 +6.1% -53 -249 -49 -176 10,957 10,958 439 1 907 -190 -897 10,328 Reported One-offs Recurring NII NFC NPFO & Recurring CoR Other* Tax Recurring O

  14. Slide 14: 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 1,137 1,137 Change Change year-to-date 126 year-to-date 344 +13.5% +135 +13.5% +135 49.3% 41 34.7% 89 851 630 11.7% 89 6.1% 36 4 3 55 9.1% 130 1.4% 11.9% 14 1

  15. Slide 15: Capital build-up from growing recurring activities

    REGULATORY CAPITAL, SHAREHOLDERS’S EQUITY, RISK-WEIGHTED ASSETS CAPITAL BUILD-UP FROM GROWING RECURRING ACTIVITIES Contributions to capital adequacy ratio in 9M 2018 (%) Contributions to equity in 9M 2018 (CZK million) -27 bps +1.4% 2.4 10,958 -8,876 18.6 98,162 99,502 18.4 -361 -381 -1.6 -0.1 -0.8

  16. Slide 16: Positive effect of growing volumes and interest rates

    NET INTEREST AND SIMILAR INCOME POSITIVE EFFECT OF GROWING VOLUMES AND INTEREST RATES  Net interest income in 9M 2018 +5.8% YoY. NII in 3Q 2018 was up 5.3% QoQ  Increases in repo rate and higher interbank rates supported yields from reinvestment of deposits and capital  NII from deposits due also

  17. Slide 17: Clients upgrading to better account packages

    NET FEES AND COMMISSIONS CLIENTS UPGRADING TO BETTER ACCOUNT PACKAGES 1,610 1,640 1,572 1,519 1,505 1,514  NFC in 9M 2018 down 1.1% YoY, 3Q -3.7% QoQ 267 230 196 214 199 210 177 195  Deposit product fees – supported by clients 178 176 186 195 169 175 175 171 173 166 upgrading to account bundles wi

  18. Slide 18: Strong result in Q3 boosted by extraordinary large client hedging deals

    NET PROFIT FROM FINANCIAL OPERATIONS STRONG RESULT IN Q3 BOOSTED BY EXTRAORDINARY LARGE CLIENT HEDGING DEALS  NPFO in 9M 2018 down by 10.8% YoY, 3Q18 941 1,013 higher by 35.6% QoQ 862 722 747 660 595  YoY decrease in NPFO had been expected 653 560 401 because 2017 had been boosted by significant 4

  19. Slide 19: Recurring costs growth below inflation

    OPERATING EXPENDITURES RECURRING COSTS GROWTH BELOW INFLATION  Recurring* OPEX for 9M 2018 grew by +1.8% YoY. Reported OPEX in 9M 2018 was up 0.4% YoY.  Recurring* Cost / Income in 9M 2018 at 46.0% (v. 46.4% in 9M 2017).  Reported Cost / Income in 9M 2018 at 46.4% (v. 47.4% in 9M 2017)  Recurrin

  20. Slide 20: Agenda

    AGENDA  MACROECONOMIC ENVIRONMENT  HIGHLIGHTS OF KB’s PERFORMANCE  BUSINESS PERFORMANCE  FINANCIAL PERFORMANCE  ASSET QUALITY & COST OF RISK  APPENDIX KB GROUP AS OF 30 SEPTEMBER 2018 08 NOVEMBER 2018 20

  21. Slide 21: Sound asset quality

    LOAN PORTFOLIO QUALITY SOUND ASSET QUALITY Gross lending  Loan exposure up 2.4% YoY and 0.9% QoQ CZK billion 625.8 607.4 628.3 635.2 640.7 607.4  NPL exposure ratio down to 2.8% YoY (vs. 3.2% in 3Q 2017) driven by low default rates, good 596.8 579.3 565.8 587.8 595.3 601.2 recovery performance, wr

  22. Slide 22: Continued low level of cost of risk

    COST OF RISK CONTINUED LOW LEVEL OF COST OF RISK Total Cost of Risk (Year-to-date, in basis points)  9M 2018 net release in CoR at CZK 660 million 13 11 4 (vs. net release in CoR at CZK 221 million for 0 9M 2017) -3 -5 -5 -5 -6 -11 -12 -13 -14  CoR on corporate loan portfolio at -18 bps in -16 -17

  23. Slide 23: Agenda

    AGENDA  MACROECONOMIC ENVIRONMENT  HIGHLIGHTS OF KB’s PERFORMANCE  BUSINESS PERFORMANCE  FINANCIAL PERFORMANCE  ASSET QUALITY & COST OF RISK  APPENDIX KB GROUP AS OF 30 SEPTEMBER 2018 08 NOVEMBER 2018 23

  24. Slide 24: 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 1,669,000 clients (+1%)  MPSS 483,000 clients (+1%)  KBPS 532,000 clients (0%)  ESSOX (Group) 213,000 active client

  25. Slide 25: Year-to-date income statement

    CONSOLIDATED INCOME STATEMENT YEAR-TO-DATE INCOME STATEMENT Profit and Loss Statement Reported* Recurring Change Change (CZK million, unaudited) 9M 2017 9M 2018 9M 2017 9M 2018 YoY YoY Net interest income and similar income 15,621 16,528 5.8% 15,621 16,528 5.8% Net fee & commission income 4,644 4,59

  26. Slide 26: Quarterly reported profit & loss (including one-off items)

    CONSOLIDATED INCOME STATEMENT – QUARTERLY VIEW QUARTERLY REPORTED PROFIT & LOSS (INCLUDING ONE-OFF ITEMS) Profit and Loss Statement Reported* Change Change (CZK million, unaudited) 3Q 2017 2Q 2018 3Q 2018 YoY QoQ Net interest income and similar income 5,211 5,444 5,735 10.1% 5.3% Net fee & commissio

  27. Slide 27: Quarterly recurring profit & loss (excluding one-off items)

    CONSOLIDATED INCOME STATEMENT – QUARTERLY VIEW QUARTERLY RECURRING PROFIT & LOSS (EXCLUDING ONE-OFF ITEMS) Profit and Loss Statement Recurring Change Change (CZK million, unaudited) 3Q 2017 2Q 2018 3Q 2018 YoY QoQ Net interest income and similar income 5,211 5,444 5,735 10.1% 5.3% Net fee & commissi

  28. Slide 28: Balance sheet growth driven mainly by deposits from clients and banks

    CONSOLIDATED STATEMENT OF FINANCIAL POSITION BALANCE SHEET GROWTH DRIVEN MAINLY BY DEPOSITS FROM CLIENTS AND BANKS 30 Sep 31 Dec 1 Jan 30 Sep Balance Sheet 2017 2017 2018 * 2018 Ytd Ytd According According According According rel. abs. (CZK million, unaudited) to IAS 39 to IAS 39 to IFRS 9 to IFRS 9

  29. Slide 29: Capital & profitability indicators

    FINANCIAL RATIOS CAPITAL & PROFITABILITY INDICATORS Reported Recurring (year-to-date, IFRS9) 30/09//2017 31/12/2017 30/09/2018 30/09/2017 30/09/2018 Capital adequacy 16.8% 18.6% 18.4% Tier 1 ratio = Core Tier 1 ratio 16.8% 18.0% 17.8% Risk weighted assets for credit risk (CZK billion) 380.8 352.9 37

  30. Slide 30: Business performance of subsidiaries 1/2

    OVERVIEW OF KB SUBSIDIARIES BUSINESS PERFORMANCE OF SUBSIDIARIES 1/2 9M 2017 9M 2018 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 10,409 10,369 0% Volume of total loans (gross, CZK million) 41,966 48,969 17% Volume of deposits (CZK million) 62,492

  31. Slide 31: Business performance of subsidiaries 2/2

    OVERVIEW OF KB SUBSIDIARIES BUSINESS PERFORMANCE OF SUBSIDIARIES 2 / 2 9M 2017 9M 2018 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 31,173 36,572 17% Volume of total financing (gross, CZK million) 8,043 8,366 4% Average number of FTEs 45 44 -2% Komerční

  32. Slide 32: Macroeconomic environment – Czech Republic

    MACROECONOMIC ENVIRONMENT – CZECH REPUBLIC Macroeconomic Indicators 2015 2016 2017 2018* 2019* Real GDP (%, average) 5.4 2.4 4.5 2.9 2.7 Inflation (%, average) 0.3 0.7 2.5 2.2 2.4 Household consumption (%, average) 3.8 3.5 4.4 3.5 2.9 Unemployment (%, av., MLSA meth.) 6.4 5.4 4.1 3.2 3.0 M2 (%, aver

  33. Slide 33: Interest rates evolution

    INTEREST RATES EVOLUTION (for the period 1 January 2006 – 6 November 2018) 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Pribor 3M Pribor 6M ČNB REPO Rate IRS 5Y IRS 10Y KB GROUP AS OF 30 SEPTEMBER 2018 08 NOVEMBER 2018 33

  34. Slide 34: KB #1 listed Czech bank

    KB SHARES AND SHAREHOLDERS KB #1 LISTED CZECH BANK As of 30 September 2018 Development of KB share price and PX index (1 January 2001 – 6 November 2018)  The number of shareholders comprised 500% 48,255 corporate entities and private individuals. 400% 300%  Of the Bank’s total share capital of CZK

  35. Slide 35: Investor Relations

    Investor Relations 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 KB GROUP AS OF 30 SEPTEMBER 2018 08 NOVEMBER 2018 35

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