Komercni Banka, A.s. · PSECZ:KOMB
Komercni Banka, A.s — Q3 2023 Earnings Presentation
43 slides from Komercni Banka, A.s's earnings presentation, Nov 3, 2023
Slide 1: Komerční banka Group
Prague, 3 November 2023 Komerční banka Group Consolidated unaudited results as of 30 September 2023 and status of implementation of KB 2025 strategy
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 Highlights as of 30 September 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 KB 2025 Year 3 delivery Appendix KB Group results as of 30 September 2023 3
Slide 4: First nine months of 2023: Solid delivery amidst stagflationary economy
Highlights of 9M&Q3 2023 First nine months of 2023: Solid delivery amidst stagflationary economy Solid business Strong balance sheet Nine months 2023 Third quarter 2023 performance Group net income Group net income Client loans Liquidity coverage ratio CZK 12.4 billion CZK 4.3 billion +2.7 % YoY +1.
Slide 5: Agenda
Agenda Highlights as of 30 September 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 KB 2025 Year 3 delivery Appendix KB Group results as of 30 September 2023 5
Slide 6: Czech economy looking for growth impetus
Macro Czech economy looking for growth impetus Czech GDP development (% year-on-year) 10 3.6 KB Economic Research Forecast GDP in 3Q 20231 down -0.3% QoQ and down -0.6% YoY. Economic activity hindered 5 1.6 2.4 2.5 mainly by weak household consumption and investments, while net exports contribute po
Slide 7: Agenda
Agenda Highlights as of 30 September 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 KB 2025 Year 3 delivery Appendix KB Group results as of 30 September 2023 7
Slide 8: Total loans to clients up 2.7%
Loans to clients Total loans to clients up 2.7% Group lending (w/o repo, but incl. client bonds) (CZK billion) +2.7% +1.7% Net loans to deposits ratio at 79.3%. Liquidity coverage ratio 157% 769.4 787.2 784.9 789.1 794.6 808.3 81.5 83.8 85.3 86.5 88.5 90.6 8.2% Consumer lending driven by successful
Slide 9: Deposits +1.2%, other AUM up 14.7% YoY
Deposits and other AUM Deposits +1.2%, other AUM up 14.7% YoY Group deposits (excluding repo operations) (CZK billion) +1.2% +2.8% Non-deposit assets under management (CZK million) 1,024.3 1,010.1 979.5 994.7 1,022.4 +14.7% 916.8 58.0 56.6 54.2 53.9 52.8 -6.8% 56.0 329.0 +2.2% 347.0 336.7 327.8 320.
Slide 10: Agenda
Agenda Highlights as of 30 September 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 KB 2025 Year 3 delivery Appendix KB Group results as of 30 September 2023 10
Slide 11: Normalisation of NII, better non-interest revenues, non-recurring provision releases
Profit & Loss Normalisation of NII, better non-interest Development of quarterly net profit … (CZK million) revenues, non-recurring provision releases -8.5% -5.7% Drivers for year on year change in attributable net profit 4,812 4,664 4,632 4,525 4,267 (as of 30 September 2023) 3,561 -4.9% 12,990 2,2
Slide 12: Balance sheet up by 1.2% year-on-year
Statement of financial position Balance sheet up by 1.2% year-on-year Assets Liabilities and Equity +1.2% (CZK billion) +1.2% Year-on-year (CZK billion) Year-on-year +15.8% +15.8% 1,494 1,512 1,494 1,512 110 119 +8.1% 1,305 1,305 446 440 -1.4% 85 248 1,121 1,125 +0.4% 951 777 781 810 +4.3% -2.7% -0.
Slide 13: Capital position strong
Capital Capital position strong Contributions to shareholders’ equity in 9M 2023 (CZK million) Total capital adequacy at 20.2% over the applicable minimum of 17.4% 12,353 -11,411 124,676 125,108 -473 -37 CET 1 ratio at 19.6% over the required 12.7% (minimum T1 at 14.7%) Dividend provision of 65% boo
Slide 14: Stabilising deposit rates, mortgage spreads
Net interest income Stabilising deposit rates, mortgage Year-to-date -10.1% spreads (CZK million) 21,499 1,976 -17% 19,320 Net interest margin (%) Other 1,631 2.17% 2.22% 2.12% 2.25% 2.21% 2.42% 2.01% 2.01% 1.91% 1.99% 1.86% 1.96% NII from deposits 9,920 -14% 8,478 NII from loans NII from IB 2Q 2022
Slide 15: Positive trend in fees
Net fees and commissions Positive trend in fees Year-to-date +3.4% (CZK million) 4,447 4,597 Transaction fees Transaction fees 3% 1,334 1,293 Transaction activity increasing for non-cash transaction categories, mainly for Deposit product fees card payments 579 5% 607 Loan fees 310 3% 321 Deposit pro
Slide 16: Client activity in Q3 affected by soft real economy
Net profit from financial operations Client activity in Q3 affected by Year-to-date -2.6% soft real economy (CZK million) 2,913 2,838 Capital markets Capital markets Client activity in 3Q 2023 reflecting slower real economy, weak confidence levels and 1,389 -14% 1,189 Net gains on FX from payments l
Slide 17: Operating expenditures absorbing inflation and transformation costs
Operating expenditures Operating expenditures absorbing Year-to-date +7.7% inflation and transformation costs (CZK million) Personnel expenses - number of employees (average FTE) in 9M 2023: 7,541 Personnel costs -5,731 9% -6,222 (+0.6 YoY) as decreasing staff numbers in support functions and distri
Slide 18: Agenda
Agenda Highlights as of 30 September 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 KB 2025 Year 3 delivery Appendix KB Group results as of 30 September 2023 18
Slide 19: 3Q 2023 Asset quality
Loan portfolio quality 3Q 2023 Asset quality Group lending (CZK billion) 769.4 787.2 784.9 789.1 794.6 808.3 Loan portfolio up by 2.7% YoY and 1.7% QoQ Resilient and stable credit risk profile 664.1 663.5 665.8 672.9 685.9 698.8 • Stage 2 share at 13% • NPL ratio at 2% Continued low default intensit
Slide 20: 3Q 2023 Cost of risk development
Cost of risk 3Q 2023 Cost of risk development Total Cost of risk (Year-to-date, in basis points) 40 37 3Q 2023 CoR net release at CZK 138 million 21 22 14 15 8 6 8 CZK 202 million net release recorded on non-retail exposures driven by -16 8 9 -21 -22 resolution of a few corporate NPL exposures -5 -5
Slide 21: Agenda
Agenda Highlights as of 30 September 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 KB 2025 Year 3 delivery Appendix KB Group results as of 30 September 2023 21
Slide 22: Outlook for the rest of 2023
Outlook for 2023 Outlook for the rest of 2023 The below text updates and replaces outlook for 2023 first presented on 8 February 2023 alongside release of KB’s full year 2022 results and updated on 12 May and 3 August 2023. Investors are advised to consider high level of uncertainty and risks when f
Slide 23: Agenda
Agenda Highlights as of 30 September 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 KB 2025 Year 3 delivery Appendix KB Group results as of 30 September 2023 23
Slide 24: KB 2025 Strategic Framework
KB 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 people wi
Slide 25: Deliveries in Year 3 of KB 2025 Plan
Deliveries in Year 3 of KB 2025 Plan ▪ Marketable retail bank introduced in April; client proposition based on subscription plans; significantly simplified product DIGITAL BANK FOR PEOPLE catalogue; more than 50,000 clients enrolled by 30 September 2023 WITH ASPIRATIONS ▪ New TSYS Prime payment card
Slide 26: Deliveries in Year 3 of KB 2025 Plan
Deliveries in Year 3 of KB 2025 Plan ENVIRONMENT, SOCIETY, ▪ Scope 1+2 emissions in 2022 down by 44% compared to 2019, at 13.5 kg CO2 eq. per client GOVERNANCE ▪ The outstanding volume of ESG compliant loans to corporate clients up by 32.7% YoY to CZK 53.3 billion ▪ MSCI ESG rating at AA, S&P Global
Slide 27: Interim delivery on operational targets
Interim delivery on operational targets TARGET MAIN OPERATIONAL TARGETS * 2019 2022 SEP-2023 2025 CLIENT SATISFACTION (NPS) ▪ Retail NPS: further improved satisfaction with services on the branch, continued excellent satisfaction – INDIVIDUALS 32 38 41 50 with contact centres, day-to-day banking, ca
Slide 28: Growth and financial targets for 2025
Growth and financial targets for 2025 ▪ Revenue growth expected to accelerate mainly from 2025 with the data driven digital sales & advisory model in the new digital bank, as well as new sources of revenues ▪ Operating expenditures in 2025 expected at similar level as in 2023 thanks to ongoing effic
Slide 29: Agenda
Agenda Highlights as of 30 September 2023 Macroeconomic environment Business performance Financial performance Asset quality and cost of risk Outlook for the rest of 2023 KB 2025 Year 3 delivery Appendix KB Group results as of 30 September 2023 29
Slide 30: Number of clients and distribution network
KB Group clients and distribution network Number of clients and distribution network Number of bank clients (thousands, CZ) 30-Sep-22 30-Sep-23 YoY 1,667 1,664 1,641 1,625 1,652 1,665 Number of clients KB Group’s clients 2,246,000 2,218,000 -28,000 Komerční banka 1,651,000 1,665,000 14,000 – individ
Slide 31: Income statement
Consolidated income statement Income statement (CZK million, unaudited) 9M 2022* 9M 2023 YoY Net interest income 21,499 19,320 -10.1% Net fee & commission income 4,447 4,597 3.4% Net profit of financial operations 2,913 2,839 -2.5% Dividend and other income 146 243 66.4% Net banking income 29,005 26
Slide 32: Income statement
Consolidated income statement Income statement (CZK million, unaudited) 3Q 2022* 2Q 2023 3Q 2023 YoY QoQ Net interest income 7,342 6,463 6,507 -11.4% 0.7% Net fee & commission income 1,478 1,534 1,548 4.7% 0.9% Net profit of financial operations 967 1,063 776 -19.8% -27.0% Dividend and other income
Slide 33: Balance sheet
Consolidated statement of financial position Balance sheet (CZK million, unaudited) 30-Sep-22* 31-Dec-22 * 30-Sep-23 YoY rel. YoY abs. Ytd rel. Ytd abs. Assets 1,493,670 1,305,304 1,512,109 1.2% 18,439 15.8% 206,805 Cash and current balances with central bank 25,497 14,190 11,590 -54.5% -13,907 -18.
Slide 34: Capital & profitability indicators
Financial ratios Capital & profitability indicators Adjusted for IFRIC 21 Reported linearisation* (year-to-date, IFRS 9) 30-Sep-22 31-Dec-22 30-Sep-23 30-Sep-22 30-Sep-23 Capital adequacy 21.1% 19.5% 20.2% Tier 1 ratio = Core Tier 1 ratio 20.5% 18.9% 19.6% Risk weighted assets for credit risk (CZK b
Slide 35: 9M 2023 Cost of risk structure
Composition of Cost of risk 9M 2023 Cost of risk structure Key components Contribution to 9M 2023 CoR (bps) Non-retail NPL portfolio -21 bps Retail NPL portfolio 3 bps Non-retail performing portfolio (Stage 1 & 2) 1 bps Retail performing portfolio (Stage 1 & 2) 1 bps Total -16 bps KB Group results a
Slide 36: Business performance of subsidiaries (1/2)
Overview of KB subsidiaries Business performance of subsidiaries (1/2) 9M 2022 9M 2023 YoY Modrá pyramida (100%) #2 building savings & loans company Volume of new loans (CZK million) 13,361 7,541 -44% Volume of total loans (gross, CZK million) 83,761 90,607 8% Volume of deposits (CZK million) 56,586
Slide 37: Business performance of subsidiaries (2/2)
Overview of KB subsidiaries Business performance of subsidiaries (2/2) 9M 2022 9M 2023 YoY Factoring KB (100%) #1 on the Czech factoring market Factoring turnover (CZK million) 56,582 53,856 -5% Volume of total financing (gross, CZK million) 9,789 8,977 -8% Average number of FTEs 42 14 -67%* KB Poji
Slide 38: Debt securities portfolio in the banking book
Securities Debt securities portfolio in the banking book (CZK bilion) 172.2 161.8 Slovakia 4.8 131.7 153.3 161.7 10.5 5.7 Poland 0.0 30.1 18.9 30/09/2022 30/09/2023 Debt securities at amortized cost Czech sovereign securities Debt securities at FV through OCI Foreign government bonds Corporations No
Slide 39: MREL status, Tier 2
MREL, TIER 2 MREL status, Tier 2 Own funds and eligible liabilities (for MREL) 29.2% Total requirement = MREL + CBR As of 31 Dec 2023, KB Group has to fulfil final MREL 21.2% of the consolidated TRE and 9.0% (27.7% as of 31 Dec 2023) 5.91% of TE. In addition to the MREL, KB Group must fulfil the com
Slide 40: Macroeconomic environment – Czechia
Czech macroeoconomic environment Macroeconomic environment – Czechia Macroeconomic Indicators 2018 2019 2020 2021 2022 2023* 2024* 2025* Real GDP (%, average) 3.2 3.0 -5.5 3.6 2.4 -0.3 1.6 2.5 Inflation (%, average) 2.2 2.9 3.3 3.8 15.1 10.8 1.9 2.4 Household consumption (%, average) 3.3 2.6 -7.4 4.
Slide 41: Interest rates evolution
Interest rates Interest rates evolution % For the period 1 Jan 2015 – 31 October 2023 8 7 6 5 4 3 2 1 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 3M Pribor 6M Pribor 2W repo 5Y IRS 10Y IRS KB Group results as of 30 September 2023 41
Slide 42: KB - #1 listed Czech bank
KB shares and shareholder structure KB - #1 listed Czech bank Shareholder structure Development of KB share price and PX index (1 January 2001 – 31 October 2023) KB PX 550 500 450 Free-float 400 39.6% 350 300 250 200 60.4% Société Genérále 150 100 50 0 2002 2005 2008 2011 2014 2017 2020 2023 • The n
Slide 43: 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, +420 955 532 734 Internet: www.kb.cz/investors Twitter: @KB_investors Reuters: BKOM.PR Bloomberg: KOMB CP