Komercni Banka, A.s. · PSECZ:KOMB
Komercni Banka, A.s — Q2 2019 Earnings Presentation
38 slides from Komercni Banka, A.s's earnings presentation, Aug 1, 2019
Slide 1: Komerční banka Group Results, First half and second quarter 2019
PRAGUE, 1 AUGUST 2019 KOMERČNÍ BANKA GROUP RESULTS First half and second quarter 2019 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 KB’s performance Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2019 Appendix KB GROUP AS OF 30 JUNE 2019│ 1 AUGUST 2019 │ 3
Slide 4: Highlights as of 30 June 2019
HIGHLIGHTS HIGHLIGHTS AS OF 30 JUNE 2019 The number of clients with KB’s Mobile banking increased by more than 184,000 year-on-year to No. 1 position 700,000. More than 260,000 customers were using the KB Key authentication app. Clients had on the Czech market tokenized 112,000 payment cards into th
Slide 5: New digital services introduced in second quarter
NEW DIGITAL SERVICES INTRODUCED IN SECOND QUARTER CINCINK.CZ An on-line service offering assistance with residential property sales, purchases and rentals, including intermediation, legal services, valuation and financing. KB API A stable environment for third-party developers of innovative services
Slide 6: In partnership with the society
CORPORATE SOCIAL RESPONSIBILITY IN PARTNERSHIP WITH THE SOCIETY VOLUNTEERING HELPING YOUNG AND OLD Scores of employees took part in various beneficial actions, KB Jistota Foundation supported six projects many using their one day for volunteer activities that KB has relating to prevention of relatio
Slide 7: Contents
CONTENTS Highlights of KB’s performance Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2019 Appendix KB GROUP AS OF 30 JUNE 2019│ 1 AUGUST 2019 │ 7
Slide 8: Solid domestic fundamentals but uncertain global context
SOLID DOMESTIC FUNDAMENTALS ECONOMY OF THE CZECH REPUBLIC BUT UNCERTAIN GLOBAL CONTEXT Czech GDP growth (%, yoy)3 GDP in 1Q19 up +2.8% YoY, +0.6% QoQ. In 2018 the economy grew by 2.9%. The growth is driven predominantly by household consumption and fixed investments Unemployment low at 2.2% in M
Slide 9: Contents
CONTENTS Highlights of KB’s performance Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2019 Appendix KB GROUP AS OF 30 JUNE 2019│ 1 AUGUST 2019 │ 9
Slide 10: Selected deals of the second quarter of 2019
SELECTED DEALS SELECTED DEALS OF THE SECOND QUARTER OF 2019 WHOLESALE OF FUELS FINANCIAL SERVICES REAL ESTATE WOOD PROCESSING KRONOSPAN ČR, S.R.O. W.A.G. payment solutions, a.s. Home Credit Group B.V. CTPARK BUCHAREST WEST I S.R.L. KRONOSPAN OSB, S.R.O. Syndicated Credit Facility Syndicated Term Fac
Slide 11: Gross lending excluding repo up 3.2% YoY
LOANS TO CLIENTS GROSS LENDING EXCLUDING REPO UP 3.2% YOY Group lending (w/o repo, but incl. client bonds) CZK billion Group business and other loans CZK billion +3.2% (w/o repo, but incl. client bonds) +3.1% +1.2% YoY +1.5% 612.7 624.7 628.6 634.5 637.3 644.8 45.2 47.1 49.0 50.7 52.1 53.5 +13.7% Yo
Slide 12: Client deposits rose by 4.0% YoY
DEPOSITS AND OTHER AUM CLIENT DEPOSITS ROSE BY 4.0% YOY Group deposits (w/o repo operations) CZK billion Deposit product structure CZK billion +4.0% (w/o repo operations) +1.5% YoY YoY 790.7 806.6 809.6 795.5 826.1 838.6 790.6 806.6 809.5 795.5 826.1 838.6 61.6 61.3 61.1 61.8 61.5 61.6 +0.5% 559.6 5
Slide 13: Contents
CONTENTS Highlights of KB’s performance Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2019 Appendix KB GROUP AS OF 30 JUNE 2019│ 1 AUGUST 2019 │ 13
Slide 14: Net profit improvement driven by interest income
R E C O N C I L I A T IPORNO O F IFT I & N CL O OMSS E NET PROFIT IMPROVEMENT DRIVEN BY INTEREST INCOME Drivers for year on year change in attributable net income (as of 30 June 2019) +6.8% +6.0% -22 -74 7,158 7,213 872 8 55 -219 -47 6,754 6,754 -114 0 Reported One-offs in Recurring NII NFC NPFO & R
Slide 15: Balance sheet expanding with client deposits and equity
STATEMENT OF FINANCIAL POSITION BALANCE SHEET EXPANDING WITH CLIENT DEPOSITS AND EQUITY Assets 6.6% Liabilities 6.6% CZK billion 11.9% and Equity 11.9% 1,186 YoY CZK billion 1,186 YoY 1,113 1,113 1,060 1,060 125 +3.7% 120 92 372 +14.1% 326 281 832 893 +7.3% 812 623 625 642 +3.0% 131 118 134 +1.9% 3
Slide 16: Equity higher year-on-year, affected by annual dividend payment
EQUITY HIGHER YEAR-ON-YEAR CAPITAL, RWA YEAR-TO-DATE AFFECTED BY ANNUAL DIVIDEND PAYMENT Contributions to capital adequacy ratio in 1H 2019 (%) Contributions to equity in 1H 2019 (CZK million) +49 bps 1.60 7,213 -9,632 103,329 18.97 280 100,781 18.48 -1.04 -0.04 -409 0.07 -0.10 31 Dec RWA RWA Other
Slide 17: Lower long-term yields limiting reinvestment income
NET INTEREST AND SIMILAR INCOME LOWER LONG-TERM YIELDS LIMITING REINVESTMENT INCOME 6.8% Quarterly NIM (%) NII -0.4% 2.20 2.12 2.19 2.34 2.28 2.15 5,788 6,030 5,892 5,866 5,394 5,492 385 346 383 431 390 426 2,618 2,891 2,901 2,888 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 2Q 2019 2,338 2,428 Deeper
Slide 18: Fee income stable
NET FEES AND COMMISSIONS FEE INCOME STABLE NFC +0.6% Deposit product fees – clients upgrading to account packages +7.4% with a wider range of services included 1,523 1,580 1,533 1,459 1,463 Transaction fees – rapid growth in card transactions. Continuing 1,428 shift from cash/branch to digital.
Slide 19: Hedging demand improved with higher IR, FX volatility
NET PROFIT FROM FINANCIAL OPERATIONS HEDGING DEMAND IMPROVED WITH HIGHER IR, FX VOLATILITY Lower long-term rates in Q2 revived demand for IR hedging, while NPFO +2.8% +34.5% appreciation of CZK invited some importers to hedge FX rate 1,013 790 A larger part of gains from market operations booked
Slide 20: Costs reflecting transformation and digitalisation
OPERATING EXPENDITURES COSTS REFLECTING TRANSFORMATION AND DIGITALISATION Average number of employees (quarterly) +2.7%* / -0.3% OPEX YoY -15.9% 19 8,497 8,454 8,355 8,339 8,168 8,121 -3.9% -1,847 -2,151 -1,932 -1,896 -1,905 -1,939 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 2Q 2019 -928 -1,008 -1,224 -
Slide 21: Contents
CONTENTS Highlights of KB’s performance Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2019 Appendix KB GROUP AS OF 30 JUNE 2019│ 1 AUGUST 2019 │ 21
Slide 22: Sound asset quality
LOAN PORTFOLIO QUALITY SOUND ASSET QUALITY Gross lending CZK billion Loan exposure up by 2.6 % YoY and 1.8% QoQ 628.3 635.2 640.7 636.6 640.5 651.7 NPL exposure ratio down to 2.3% YoY (vs. 2.7% in 2Q 587.8 595.3 601.2 585.8 590.6 604.5 2018) driven by low default rates, good recovery performance
Slide 23: Low cost of risk
COST OF RISK LOW COST OF RISK Total Cost of Risk (Year-to-date, in basis points) Net release of CoR in 2Q 2019 at CZK 354 million (vs. 0 -2 CoR net release at CZK 402 million in 2Q 2018) -5 -5 -5 -5 -11 -10 -11 -11 -12 -13 -14 CoR on corporate loan portfolio at -19 bps in 2Q 2019 -18 -20 -19 -19
Slide 24: Contents
CONTENTS Highlights of KB’s performance Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2019 Appendix KB GROUP AS OF 30 JUNE 2019│ 1 AUGUST 2019 │ 24
Slide 25: Outlook for 2019
OUTLOOK FOR 2019 Czech economy to grow around 2.7% with positive contribution from domestic consumption and investments, as well as exports Tight labour market remains as the main limiting factor to faster growth and driver for inflation Macroeconomic assumptions In spite of strong domestic fu
Slide 26: Contents
CONTENTS Highlights of KB’s performance Macroeconomic environment Business performance Financial performance Asset quality & cost of risk Outlook for 2019 Appendix KB GROUP AS OF 30 JUNE 2019│ 1 AUGUST 2019 │ 26
Slide 27: Number of clients and distribution network
KB GROUP CLIENTS AND DISTRIBUTION NETWORK NUMBER OF CLIENTS AND DISTRIBUTION NETWORK 1H 2018 1H 2019 YoY Number of clients Number of bank clients (thousands, CZ) 1,664 1,668 1,662 * KB Group's clients 2,393,000 2,376,000 -17,000 1,647 1,654 Komerční banka 1,666,000 1,662,000 -4,000* 1,626 – individu
Slide 28: Year-to-date income statement
CONSOLIDATED INCOME STATEMENT YEAR-TO-DATE INCOME STATEMENT Profit and Loss Statement Reported* Recurring Change Change Note for recurring figures: (CZK million, unaudited) 1H 2018 1H 2019 1H 2018 1H 2019 YoY YoY Net interest income and similar income 10,887 11,759 8.0% 10,887 11,759 8.0% 1H 2018: N
Slide 29: Quarterly income statement (including one-off items)
QUARTERLY INCOME STATEMENT CONSOLIDATED INCOME STATEMENT – QUARTERLY VIEW (INCLUDING ONE-OFF ITEMS) Profit and Loss Statement Reported* Change Change (CZK million, unaudited) 2Q 2018 1Q 2019 2Q 2019 YoY QoQ Net interest income and similar income 5,493 5,892 5,867 6.8% -0.4% Net fee & commission inco
Slide 30: Quarterly income statement (excluding one-off items)
QUARTERLY INCOME STATEMENT CONSOLIDATED INCOME STATEMENT – QUARTERLY VIEW (EXCLUDING ONE-OFF ITEMS) Profit and Loss Statement Recurring Change Change Note for recurring figures: (CZK million, unaudited) 2Q 2018 1Q 2019 2Q 2019 YoY QoQ Net interest income and similar income 5,493 5,892 5,867 6.8% -0.
Slide 31: Balance sheet
CONSOLIDATED STATEMENT OF FINANCIAL POSITION BALANCE SHEET Balance Sheet 30 Jun 31 Dec 30 Jun YoY YoY Ytd Ytd (CZK million, unaudited) 2018 2018 2019 rel. abs. rel. abs. Assets 1,112,710 1,059,932 1,185,993 6.6% 73,283 11.9% 126,061 Cash and current balances with central bank 21,318 24,851 22,425 5.
Slide 32: Capital & profitability indicators
FINANCIAL RATIOS CAPITAL & PROFITABILITY INDICATORS Reported Recurring* (year-to-date, IFRS 9) 30/06/2018 30/06/2019 30/06/2018 30/06/2019 Capital adequacy 18.1% 19.0% Tier 1 ratio = Core Tier 1 ratio 17.5% 18.4% Risk weighted assets for credit risk (CZK billion) 369.0 373.5 Net interest margin, ann
Slide 33: Decreasing NPL exposure
LOAN PORTFOLIO QUALITY DECREASING NPL EXPOSURE NPL Evolution CZK MILLION Retail Retail NPL exposure contraction reflecting net outflows from default classification and portfolio sales Corporate NPL exposure evolution driven by 2 main factors: concentrated and limited inflow into default, concent
Slide 34: Business performance of subsidiaries 1/2
OVERVIEW OF KB SUBSIDIARIES BUSINESS PERFORMANCE OF SUBSIDIARIES 1/2 1H 2018 1H 2019 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 7,005 4,527 -35% Volume of total loans (gross, CZK million) 47,078 53,522 14% Volume of deposits (CZK million) 61,332
Slide 35: Business performance of subsidiaries 2/2
OVERVIEW OF KB SUBSIDIARIES BUSINESS PERFORMANCE OF SUBSIDIARIES 2/2 1H 2018 1H 2019 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 24,837 25,913 4% Volume of total financing (gross, CZK million) 8,463 8,820 4% Average number of FTEs 45 44 -1% Komerční poj
Slide 36: Macroeconomic environment – Czechia
MACROECONOMIC ENVIRONMENT – CZECHIA Macroenomic indicators 2015 2016 2017 2018 2019f 2020f Real GDP (%, average) 5.4 2.4 4.5 2.9 2.7 2.1 Household consumption (%, average) 3.8 3.5 4.4 3.3 2.7 2.1 Inflation (%, average) 0.3 0.7 2.5 2.1 2.6 2.7 Unemployment (%, avg., ILO methodology) 5.1 4.0 2.9 2.2 2
Slide 37: Interest rates evolution
INTEREST RATES EVOLUTION For the period 1 Jan 2006 – 26 July 2019 KB GROUP AS OF 30 JUNE 2019│ 1 AUGUST 2019 │ 37
Slide 38: KB #1 listed Czech bank
KB #1 LISTED CZECH BANK Development of KB share price and PX index (1 January 2001 – 26 July 2019) Shareholder structure Free-float 39.6% Société Générale 60.4% • The number of shareholders comprised 48,834 corporate entities and private individuals. • Of the Bank’s total share capital of CZK 19,004