Slide 1: Komerční banka Group Financial results as of 31 December 2016
Komerční banka Group Financial results as of 31 December 2016 According to International Financial Reporting Standards, consolidated, unaudited Prague, 9 February 2017
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 Business results 4 Financial results 11 Loan portfolio quality and cost of risk 21 Appendix 24 3
Slide 4: Czech economy on a solid track
Economy of the Czech Republic Czech economy on a solid track Czech GDP in 2016 was driven by solid domestic Real GDP outlook (YoY, %) consumption and foreign demand. In contrast, fixed investments and construction fell significantly, due to postponed public investments and administrative 4.6 restr
Slide 5: KB in 2016: Strong contribution to the Czech and Slovak economies
KB in 2016: Strong contribution to the Czech and Slovak economies, boosting efficiency and preparing for the future KB Group continued supporting the Czech economy as it grew its lending in the Growing lending individuals as well as businesses segments faster than did the broader market. Total l
Slide 6: Strategic priorities for 2017
Strategic priorities for 2017 Results of 2016 confirm resilience of KB’s banking model focused on meeting the financial needs of clients # Clients Growing the # Transactions volume of Volume of AUM business activities Structured financing Cash handling Shared services Volume of loans Financing with
Slide 7: Selected deals of the fourth quarter of 2016
Selected deals of the fourth quarter of 2016 7
Slide 8: Gaining share on lending market
Loans to clients Gaining share on lending market CZK billion 593.4 595.4 548.2 548.8 570.8 Gross loans up 8.6% YoY, +0.3% QoQ to 534.0 38.1 38.8 37.0 37.1 37.7 CZK 595.4 billion. Contribution from PSA Finance 36.7 acquisition amounted to CZK 4.8 bil. or 0.9 p.p. 194.9 201.1 207.8 179.1 185.2 189.1
Slide 9: Reinforcing position in retail
Deposits and other assets under management Reinforcing position in CZK billion Group deposits retail 657.7 656.3 679.1 694.3 708.6 699.4 64.9 64.1 64.1 69.3 68.5 67.0 208.9 215.8 230.1 Standard Group deposits (excluding repo) grew by 189.6 197.4 200.5 +7.4% YoY to CZK 694.2 billion, -2.0% QoQ. Tot
Slide 10: Agenda
Agenda Business results 4 Financial results 11 Loan portfolio quality and cost of risk 21 Appendix 24 10
Slide 11: Recurring net profit slightly down in a challenging environment
Consolidated income statement Recurring net profit slightly down in a challenging environment; reported result boosted by one-offs Profit and Loss Statement Reported Recurring Change Change (CZK million, unaudited) FY 2015 FY 2016 FY 2015 FY 2016 YoY YoY Net interest income 21,357 21,068 -1.4% 21,35
Slide 12: Loans and deposits main drivers of balance sheet growth
Consolidated statement of financial position Loans and deposits main drivers of balance sheet growth 31 Dec 31 Dec Balance Sheet 2015 2016 YoY (CZK million, unaudited) Restated* Reported Assets 891,555 922,737 3.5% Cash and balances with central bank 128,336 112,241 -12.5% Amounts due from banks 47,
Slide 13: Shareholders' equity stable
Shareholders’ equity Shareholders’ equity stable Contributions to equity in FY 2016 Shareholders’ equity slightly declined year-on-year (-0.8%) at CZK 105.4 billion, as the generation of 13,688 net profit was offset by the volume of dividends paid 106,229 15 105,400 -11,709 -1,274 -14 -1,536 Rev
Slide 14: Capital adequacy strengthened by adjustment in dividend payout policy
Financial ratios Capital adequacy strengthened by adjustment in dividend payout policy (year-to-date) 31/12/2015 1 31/12/2016 YoY Capital adequacy (reported, comprising only Core Tier 1)2 16.3% 16.2% Total risk weighted assets (CZK billion) 407.6 442.9 1 8.6% Risk weighted assets for credit risk (
Slide 15: Balancing growth and shareholders' remuneration
Capital strategy and dividends Balancing growth and shareholders’ remuneration Dividend per share (gross, in CZK, recalculated) In view of KB’s 2016 result and capital position, KB’s Board of Directors has decided to propose to the Supervisory Board a dividend payment of CZK 7,602 million, i.e. CZ
Slide 16: NII stabilising thanks to growth in loan volumes
Net interest income NII stabilising thanks to growth in loan volumes NII -1.4% YoY in FY 2016, 4Q 2016 -0.5% QoQ 5,334 5,354 5,234 5,213 5,323 5,299 396 349 319 314 321 289 NII from loans – increase driven by growth in 2,569 2,640 2,595 2,622 2,716 2,717 volumes. Impact of intense competition on
Slide 17: Growth in the volume of clients' activities offset by regulation of interchange fees
Net fees and commissions Growth in the volume of clients’ activities offset by regulation of interchange fees and sale of card acquiring NFC in FY 2016 declined by 4.1% YoY, 4Q 2016 1,765 1,708 1,712 1,700 1,676 1,599 down 4.6% QoQ affected by the sale of 80% stake in 223 217 212 267 214 merchant
Slide 18: More demand for hedging as currency floor presumed to end around mid-2017
Net profit from financial operations More demand for hedging as currency floor presumed to end around mid-2017 1,626 Net profit from financial operations in FY 2016 rose 373 by 47.0% YoY, Excluding one-off CZK 959 gross 297 gain from stake in VISA Europe, FY 2016 NPFO 774 826 increased by 10.3% Yo
Slide 19: Good cost control
Operating expenditures Good cost control 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 Reported OPEX in FY 2016 -2.3% YoY. 4Q 2016 178 +5.7% QoQ due to higher marketing and IT spending -1,720 -1,700 -1,692 -1,737 -1,810 -1,790 Recurring OPEX in FY 2016 +0.7% YoY, excluding one-off impairment o
Slide 20: Agenda
Agenda Business results 4 Financial results 11 Loan portfolio quality and cost of risk 21 Appendix 24 20
Slide 21: Sound asset quality
Loan portfolio quality Sound asset quality CZK billion Gross lending 595.4 570.8 593.4 Loan exposure +8.6% YoY, QoQ +0.3% 534.0 548.2 548.8 Watch exposure CZK +2.2 bil. QoQ driven by methodological change related to preparation of 516.3 518.4 540.3 563.2 563.6 500.4 IFRS 9 implementation LUSR
Slide 22: Cost of Risk driven by a few Corporate clients
Cost of Risk Cost of Risk driven by a few Corporate clients YtD Cost of Risk increased to 32 bps in FY 2016 Total Cost of Risk (Year-to-date, in basis points) 71 (vs. 21 bps in FY 2015) 64 65 Increase of Cost of Risk on Corporates to 71 bps 38 21 30 32 17 29 (vs. 18 bps in FY 2015) driven by a f
Slide 23: Agenda
Agenda Business results 4 Financial results 11 Loan portfolio quality and cost of risk 21 Appendix 24 23
Slide 24: Number of clients and distribution network
Number of clients and distribution network Number of bank clients (thousands, CZ) KB Group’s 2.4 million clients, of which KB bank 1,654,000 clients (0%) MPSS 491,000 clients (-6%) KBPS 534,000 clients (-2%) 1,626 1,647 1,654 1,602 1,602 1,589 ESSOX 201,000 active clients (-8%) Network
Slide 25: Consolidated income statement – quarterly view
Consolidated income statement – quarterly view Profit and Loss Statement 4Q 2015 Change Change 3Q 2016 4Q 2016 restated YoY QoQ (CZK million, unaudited) Net interest income 5,354 5,323 5,299 -1.0% -0.5% Net fees & commissions 1,765 1,676 1,599 -9.4% -4.6% Income from financial operations 774 652 826
Slide 26: Recurring P&L – quarterly view
Recurring P&L – quarterly view Profit and Loss Statement 4Q 2015 3Q 2016 4Q 2016 Change Change recurring recurring recurring YoY QoQ (CZK million, unaudited) Net interest income 5,354 5,323 5,299 -1.0% -0.5% Net fees & commissions 1,764 1,676 1,599 -9.4% -4.6% Income from financial operations 774 65
Slide 27: Business performance of subsidiaries 1/2
Business performance of subsidiaries 1/2 FY 2015 FY 2016 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 6,298 9,430 50% Volume of total loans (gross, CZK million) 36,980 38,820 5% Volume of deposits (CZK million) 68,547 64,105 -6% Number of clients 5
Slide 28: Business performance of subsidiaries 2/2
Business performance of subsidiaries 2/2 FY 2015 FY 2016 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 35,480 37,762 6% Volume of total financing (gross, CZK million) 6,100 7,455 22% Average number of FTEs 44 45 2% Komerční pojišťovna (49%), a universal i
Slide 29: Debt securities portfolio in the banking book
Debt securities portfolio in the banking book CZK billion, as of 31 December 2016 Available-for-sale portfolio Held-to-maturity portfolio CZK 39.2 billion CZK 65.5 billion 11.2 7.9 EIB, 1.1 Poland, 8.0 Poland, 0.8 20.2 Romania, 1.9 54.3 7.9 11.2 0.8 Slovakia, 4.1 Slovakia, 3.2 10.3 Czech sovereign C
Slide 30: Macroeconomic environment – Czech Republic
Macroeconomic environment – Czech Republic Macroeconomic Indicators 2012 2013 2014 2015 2016* 2017* Real GDP (%, average) -0.7 -0.5 2.7 4.6 2.5 2.7 Inflation (%, average) 3.3 1.4 0.4 0.3 0.7 2.2 Household consumption (%, average) -1.2 0.5 1.8 3.1 2.7 2.9 Unemployment (%, av., MLSA meth.) 6.8 7.8 7.6
Slide 31: Interest rates evolution
Interest rates evolution (for the period 1 January 2005 – 3 February 2017) 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Pribor 3M Pribor 6M ČNB REPO Rate IRS 5Y IRS 10Y 31
Slide 32: KB #1 listed Czech bank
KB shares and shareholders KB #1 listed Czech bank Development of KB share price and PX index The General Meeting held on 22 April 2016 approved (1 October 2001 – 3 February 2017) a split of shares of KB in the ratio of 5:1. 500% The split took effect on 25 April 2016 by its entry in 400% the Re
Slide 33: Investor Relations
Investor Relations Jakub Černý, Robert Janeček, Renata Swaczynová, Kamila Corbet Tel.: +420 955 532 156, 955 532 734, 955 532 155 E-mail: investor_relations@kb.cz - Internet: www.kb.cz 33