Komercni Banka, A.s. · PSECZ:KOMB
Komercni Banka, A.s — Q1 2021 Earnings Presentation
44 slides from Komercni Banka, A.s's earnings presentation, May 6, 2021
Slide 1: KB Group Results as of 31 March 2021
PRAGUE, 6 MAY 2021 KB GROUP RESULTS AS OF 31 MARCH 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 of 1Q 2021 Macroeconomic environment Business perfomance Financial performance Asset quality & cost of risk Capital, dividends & outlook for 2021 Appendix KB GROUP AS OF 31 MARCH 2021│ 6 MAY 2021 │ 3
Slide 4: Highlights as of 31 March 2021
HIGHLIGHTS AS OF 31 MARCH 2021 Solid business volumes The total volume of KB Group’s lending to customers expanded by 4.0% year on year, mainly driven by lending for housing purposes. The overall volume of standard client deposits within KB Group was up by 10.1%, with strong growth reported in ret
Slide 5: Contents
CONTENTS Highlights of 1Q 2021 Macroeconomic environment Business perfomance Financial performance Asset quality & cost of risk Capital, dividends & outlook for 2021 Appendix KB GROUP AS OF 31 MARCH 2021│ 6 MAY 2021 │ 5
Slide 6: Czech economy still impacted by lockdown in Q1, but outlook improving
CZECH ECONOMY STILL IMPACTED BY CZECH ECONOMY LOCKDOWN IN Q1, BUT OUTLOOK IMPROVING • GDP in 1Q 2021 -0.3% QoQ and -2.1% YoY as per flash estimate. In 2021, Czech GDP growth (%, yoy)3 Czech economy expected to grow by 3.4%, to be driven by government and household consumption and investments. • Czec
Slide 7: COVID-19 pandemic situation
COVID-19 PANDEMIC SITUATION Accelerating vaccination, gradual opening up of economy and society Czech Daily Infection Rates Pandemic situation: Significantly declining numbers of infected people since April. As of 30 April 2021, 9% of population fully vaccinated, 20% of population received at leas
Slide 8: Contents
CONTENTS Highlights of 1Q 2021 Macroeconomic environment Business perfomance Financial performance Asset quality & cost of risk Capital, dividends & outlook for 2021 Appendix KB GROUP AS OF 31 MARCH 2021│ 6 MAY 2021 │ 8
Slide 9: Continuous innovations reflected in sound levels of client satisfaction
CONTINUOUS INNOVATIONS REFLECTED IN CLIENT RELATIONS SOUND LEVELS OF CLIENT SATISFACTION Banking identity 2019 2020 1Q 21 Net promoter score KB has launched electronic authentication for clients’ access to public services based on banking 34 33 identity (KB Key). Used immediatelly by scores of Indiv
Slide 10: Banking responsibly and sustainably
CORPORATE SOCIAL RESPONSIBILITY BANKING RESPONSIBLY AND SUSTAINABLY TOP EMPLOYER SGEF GOES GREEN KB won the first place in the banking and Loans with a sustainable positive impact provided by SGEF in 2020 investments category of the “Top Employer” reached CZK 952 million, or 7.7% of the total portfo
Slide 11: Continued transition to digital banking
DIGITAL BANKING CONTINUED TRANSITION TO DIGITAL BANKING Mobile banking – volume of payments Growing mobile banking Share of sales by channel* penetration (selected product categories, %) (CZK billion per month) 8% 3% 0% 1Q 2021 CZK 49.9 billion (+ 89% YoY) Number of clients with mobile banking 959,0
Slide 12: Gross lending excluding repo up 4.0% YoY
LOANS TO CLIENTS GROSS LENDING EXCLUDING REPO UP 4.0% YOY Group lending (w/o repo, but incl. client bonds) CZK billion Group business and other loans CZK billion +4.0% (w/o repo, but incl. client bonds) +0.5% +0.6% YoY -0.5% 668.2 676.3 692.3 691.4 694.7 654.0 56.2 57.6 59.4 61.7 63.9 66.1 +14.9% Yo
Slide 13: Selected deals of the 1Q 2021
SELECTED DEALS SELECTED DEALS OF THE 1Q 2021 OIL AND GAS TRANSPORTATION SPECIAL MACHINERY REAL ESTATE NEW PROJECT UNGELT/SEKYRA: NET4GAS, s.r.o. STUDENT AGENCY k.s. CZG - Česká zbrojovka Group SE SMÍCHOV CITY Reg S, Senior Unsecured 7Y floating rate Reg S, Senior Unsecured Floating Rate Financing CO
Slide 14: Client deposits rose by 10.1% YoY
DEPOSITS AND OTHER AUM CLIENT DEPOSITS ROSE BY 10.1% YOY Group deposits (w/o repo operations) CZK billion Deposit product structure CZK billion +10.1% (w/o repo operations) +10.4% YoY YoY 930.4 985.7 894.9 898.3 893.0 930.4 985.7 816.3 894.9 898.4 893.0 60.5 816.3 60.8 60.3 60.0 60.8 -0.5% 61.8 609.
Slide 15: Contents
CONTENTS Highlights of 1Q 2021 Macroeconomic environment Business perfomance Financial performance Asset quality & cost of risk Capital, dividends & outlook for 2021 Appendix KB GROUP AS OF 31 MARCH 2021│ 6 MAY 2021 │ 15
Slide 16: Resilient result despite deep economic downturn
R E C O N C I L I A T IPORNO O F IFT I & N CLOOM SSE RESILIENT RESULT DESPITE DEEP ECONOMIC DOWNTURN Drivers for year on year change in attributable net income (as of 31 March 2021) -24.9% 2,658 -841 131 1,997 21 401 -67 -432 154 -28 Reported NII NFC NPFO & Regulatory OPEX CoR Other* Tax Reported 1Q
Slide 17: Balance sheet growth driven by client deposits and retained earnings
BALANCE SHEET GROWTH DRIVEN BY STATEMENT OF FINANCIAL POSITION CLIENT DEPOSITS AND RETAINED EARNINGS Assets +3.5% Liabilities and Equity CZK billion CZK billion 3.5% 10.0% 10.0% YoY YoY 1,240 1,283 1,167 1,240 1,283 1,167 86 392 5.2% 118 -27.2% 372 286 87 +9.6% 924 1,012 680 +2.7% 906 661 680 81 3 4
Slide 18: NII still affected by fall in interest rates
NET INTEREST INCOME NII STILL AFFECTED BY FALL IN INTEREST RATES Net interest margin (%) QtD NII -14.4% YtD -4.9% 5,921 5,845 2.19% 2.35% 2.17% 2.17% 357 1.73% 2.00% 1.80% 1.96% 1.85% 2.03% 1.73% 1.73% 343 4,999 5,254 5,262 5,004 315 365 339 326 2,882 2,870 2,285 2,474 2,476 2,239 4Q 2019 1Q 2020 2Q
Slide 19: Fees rebound driven by DCM services, mutual funds
FEES REBOUND NET FEES AND COMMISSIONS DRIVEN BY DCM SERVICES, MUTUAL FUNDS ▪ Transaction fees – further impact from new lockdown mainly on NFC +1.6% number of cash and at-branch transactions +1.8% ▪ Deposit product fees – reflecting stable number of accounts, 1,542 1,353 1,350 1,374 clients upgradin
Slide 20: Q1 boosted by hedging of new deals, volatility
NET PROFIT FROM FINANCIAL OPERATIONS Q1 BOOSTED BY HEDGING OF NEW DEALS, VOLATILITY NPFO 70.1% ▪ Higher currency volatility and anticipation of rising interest +50.5% rates sparked stronger client demand for IR and FX hedging 919 1,002 ▪ KB in leading roles in a few exceptional significant capital 5
Slide 21: Savings offset higher regulatory costs and digitalisation
SAVINGS OFFSET HIGHER OPERATING EXPENDITURES REGULATORY COSTS AND DIGITALISATION Average number of employees (quarterly) -1.5% OPEX 1Q21/1Q20 +21.9% -4.3% 8 8,204 8,173 8,128 7,997 7,949 7,820 1Q21/4Q20 -1,959 -1,940 -1,947 -1,927 -1,836 -1,824 -1.6% 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 -
Slide 22: Contents
CONTENTS Highlights of 1Q 2021 Macroeconomic environment Business perfomance Financial performance Asset quality & cost of risk Capital, dividends & outlook for 2021 Appendix KB GROUP AS OF 31 MARCH 2021│ 6 MAY 2021 │ 22
Slide 23: 1Q 2021 asset quality
LOAN PORTFOLIO QUALITY 1Q 2021 ASSET QUALITY Gross lending CZK billion ▪ Loan exposure up by 3.6 % YoY, up by 0.6% QoQ 656.6 671.1 680.4 695.3 691.4 695.4 ▪ Confirmed resilience of KB loan portfolios 609.0 620.2 628.4 629.4 628.8 630.7 • Stable share of Stage 2 exposures below 6.5% 37.1 50.1 44.5 44
Slide 24: Cost of risk development
COST OF RISK COST OF RISK DEVELOPMENT Total Cost of Risk (Year-to-date, in basis points) 91 99 71 68 ▪ 1Q 2021 CoR net creation at CZK 586 million 52 68 74 50 34 ▪ CZK 545 million on corporate porfolios -4 10 38 43 7 -9 9 • Provisions creation concentrated on a small number of -15 9 client situation
Slide 25: Contents
CONTENTS Highlights of 1Q 2021 Macroeconomic environment Business perfomance Financial performance Asset quality & cost of risk Capital, dividends & outlook for 2021 Appendix KB GROUP AS OF 31 MARCH 2021│ 6 MAY 2021 │ 25
Slide 26: Earnings of 2020 to increase capital base in 2Q 21
CAPITAL, RWA EARNINGS OF 2020 TO INCREASE CAPITAL BASE IN 2Q 21 Contributions to capital adequacy ratio in 2021 (%) Contributions to equity in 2021 (CZK million) +11 bps 7 67 119,129 22.45 0.06 0.00 1,997 -0.04 117,058 22.34 0.09 31 Dec RWA RWA Interim OCI & 31 Mar 1 Jan 2020 YtD profit Revaluations
Slide 27: Return to normal capital management postponed by extension of dividend restrictions
RETURN TO NORMAL CAPITAL MANAGEMENT PROFIT DISTRIBUTION POSTPONED BY EXTENSION OF DIVIDEND RESTRICTIONS Corres- ▪ In March 2021, the CNB announced that it is setting the profit distribution Limitations for dividend ponding Corres- As % of Pro forma restrictions in co-ordination with other regulators
Slide 28: Baseline outlook for 2021 (update as of May)
OUTLOOK FOR 2021 BASELINE OUTLOOK FOR 2021 (UPDATE AS OF MAY) Investors are advised to consider higher than usual level of uncertainty and risks Macroeconomic • Czech economy expected to grow slightly after a sharp drop in 2020, supported by proactive economic assumptions policy. Growth should be dr
Slide 29: Contents
CONTENTS Highlights of 1Q 2021 Macroeconomic environment Business perfomance Financial performance Asset quality & cost of risk Capital, dividends & outlook for 2021 Appendix KB GROUP AS OF 31 MARCH 2021│ 6 MAY 2021 │ 29
Slide 30: Number of clients and distribution network
KB GROUP CLIENTS AND DISTRIBUTION NETWORK NUMBER OF CLIENTS AND DISTRIBUTION NETWORK 1Q 2020 1Q 2021 YoY Number of bank clients (thousands, CZ) Number of clients 1,654 1,664 1,667 1,664 1,641 1,641 KB Group's clients 2,350,000 2,286,000 -64,000* Komerční banka 1,663,000 1,641,000 -23,000 – individua
Slide 31: Quarterly income statement
CONSOLIDATED INCOME STATEMENT – QUARTERLY VIEW QUARTERLY INCOME STATEMENT Profit and Loss Statement Reported Change Change (CZK million, unaudited) 1Q 2020 4Q 2020 1Q 2021 YoY QoQ Net interest income 5,845 5,262 5,004 -14.4% -4.9% Net fee & commission income 1,353 1,350 1,374 1.6% 1.8% Net profit of
Slide 32: Balance sheet
CONSOLIDATED STATEMENT OF FINANCIAL POSITION BALANCE SHEET Balance Sheet 31 Mar 31 Dec 31 Mar YoY YoY Ytd Ytd (CZK million, unaudited) 2020 2020 2021 rel. abs. rel. abs. Assets 1,240,106 1,167,131 1,283,490 3.5% 43,384 10.0% 116,359 Cash and current balances with central bank 29,445 23,547 23,612 -1
Slide 33: Capital & profitability indicators
FINANCIAL RATIOS CAPITAL & PROFITABILITY INDICATORS Adjusted for IFRIC 21 Reported linearisation* (year-to-date, IFRS 9) 31/03/2020 31/12/2020 31/03/2021 31/03/2020 31/03/2021 Capital adequacy 20.8% 22.3% 22.5% Tier 1 ratio = Core Tier 1 ratio 20.2% 21.7% 21.8% Risk weighted assets for credit risk (
Slide 34: Terminated loan moratorium portfolios
LOAN MORATORIA TERMINATED LOAN MORATORIUM PORTFOLIOS Total moratorium o.w. defaulted % of defaulted o.w. non-defaulted % of non-defaulted CZK billion exposure exposure exposure exposure with DPD >10 exposure with DPD >10 Corporates 28.9 2.9 9.9% 0.1 0.2% Mortgages 30.2 1.6 5.3% 0.2 0.6% Other Retail
Slide 35: Stage 2 exposure evolution
STAGE 2 EXPOSURES STAGE 2 EXPOSURE EVOLUTION ▪ QoQ stable stage 2 share at 6.4% • Limited net QoQ outflow to default (CZK 1.7 billion) • QoQ migrations between stages S1 and S2 reflecting active loan portfolio monitoring activities with marginal net impact on risk classification ▪ QoQ stable stage 2
Slide 36: 1Q 2021 cost of risk structure
COMPOSITION OF 1Q21 COST OF RISK 1Q 2021 COST OF RISK STRUCTURE Key components Contribution to 1Q 2021 CoR Corporate NPL portfolio 19 bps Corporate performing portfolio (Stages 1 & 2) 11 bps Retail NPL portfolio 10 bps Retail performing portfolio (Stages 1 & 2) -4 bps Reserves for IFRS 9 provisionin
Slide 37: Lending with state Covid guarantee
LENDING WITH GUARANTEES LENDING WITH STATE COVID GUARANTEE As of 31 March 2021 Outstanding Signed exposure* GUARANTEED COVID LENDING No. of clients (CZK million) (CZK million) Covid II 937 4,024 3,642 Covid Prague 65 380 304 Covid III 2,070 13,724 12,801 Covid Plus 15 2,790 2,653 Total 3,087 20,917
Slide 38: Business performance of subsidiaries 1/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 1/2 1Q 2020 1Q 2021 YoY Modrá pyramida (100%), #2 building savings & loans company Volume of new loans (CZK million) 3,805 7,264 91% Volume of total loans (gross, CZK million) 57,583 66,145 15% Volume of deposits (CZK million) 60,798 6
Slide 39: Business performance of subsidiaries 2/2
BUSINESS PERFORMANCE OF SUBSIDIARIES OVERVIEW OF KB SUBSIDIARIES 2/2 1Q 2020 1Q 2021 YoY Factoring KB (100%), #1 on the Czech factoring market Factoring turnover (CZK million) 12,541 13,311 6% Volume of total financing (gross, CZK million) 8,575 8,143 -5% Average number of FTEs 43 41 -4% Komerční po
Slide 40: Debt securities portfolio in the banking book
SECURITIES DEBT SECURITIES PORTFOLIO IN THE BANKING BOOK CZK billion 138.5 128.8 98.5 88.6 Slovakia 5.9 124.8 13.1 7.2 Poland 0.1 0.5 40.2 40.0 31/12/2020 31/03/2021 Debt securities at amortized cost Czech government bonds Debt securities at FV through OCI Foreign government bonds Bonds of fin.insti
Slide 41: Macroeconomic environment – Czechia
MACROECONOMIC ENVIRONMENT – CZECHIA Macroeconomic Indicators 2016 2017 2018 2019 2020 2021* 2022* Real GDP (%, average) 2.5 5.4 3.2 2.2 -5.6 3.4 4.7 Inflation (%, average) 0.7 2.5 2.1 2.8 3.2 2.5 1.9 Household consumption (%, average) 3.7 4.0 3.3 2.9 -5.2 1.8 5.3 Unemployment (%, av., ILO meth.) 4.0
Slide 42: Interest rates evolution
INTEREST RATES EVOLUTION For the period 1 Jan 2006 – 30 April 2021 KB GROUP AS OF 31 MARCH 2021│ 6 MAY 2021 │ 42
Slide 43: KB #1 listed Czech bank
KB #1 LISTED CZECH BANK Development of KB share price and PX index (1 January 2001 – 30 April 2021) Shareholder structure Free-float 39.6% Société Générale 60.4% • The number of shareholders comprised 57,305 corporate entities and private individuals. • Of the Bank’s total share capital of CZK 19,00
Slide 44: 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 MARCH 2021│ 6 MAY 2021 │ 44