KB bank's net profit down 4.9 pct to Kc12.4bn in Q1-Q3

Prague, Nov 3 (CTK) - Czech bank Komercni banka (KB), whose principal shareholder is France's Societe Generale, saw its net profit fall by 4.9 percent yr/yr to Kc12.4bn for Q1-Q3 and total revenues decreased by 6.9 percent to Kc27bn, according to unaudited consolidated results the bank published on its website today.

Net interest income declined by more than 10 percent to Kc19.3bn, mainly due to narrower average spreads on deposits and loans. Net fee and commission income increased modestly, up 3.4 percent to Kc4.6bn, reflecting especially clients' greater transaction activity and larger investments in mutual funds.

Lending to customers was up 2.7 percent yr/yr to Kc808.3bn. The volume of housing loans outstanding grew by 3.8 percent. New production of housing loans improved since March after a large decline in sales during 2022. Nonetheless, some clients are still waiting for potential upcoming demand catalysts, the bank said.

Consumer loans posted an annual increase of 6.9 percent.

Deposits from clients grew by 1.2 percent from a year earlier to Kc1,022.4bn. The development was mainly driven by deposits from corporate clients. Clients were looking for greater returns on their money in saving and term accounts and in mutual funds, KB said.

At the end of the third quarter, the KB group recorded 2.22 million customers, 28,000 fewer in yr/yr terms. Komercni banka itself, however, added 14,000 clients and had 1.67 million at the end of September.

"Komercni banka's results fell short of market estimates in terms of operating revenues and net profit," XTB analyst Tomas Cverna told CTK. KB showed a decline in profitability, but on the other hand, the quality of its loan portfolio and capital adequacy improved, he said.

The bank's shares on the Prague Stock Exchange were weakening by almost 1 percent to Kc697 apiece before 09:30.

"In the third quarter, we paid close attention to the development of our new digital bank following its roll-out in retail banking in April of this year," said KB CEO Jan Juchelka.

"Our ambition is to see 100,000 clients enrolled in the New Era of Banking by the end of this year and to offer migration to the new digital bank to 1,000,000 clients during 2024," Juchelka said.

KB said the trend in providing services increasingly involves migration to digital channels. The number of the bank's branches is decreasing as a result. The bank aims to have just 200 branches, a drop from 212 at the end of September and from 342 Czech branches as of December 31, 2019.

Operating expenses were up by 7.7 percent at Kc13.0bn. Personnel expenses were higher by 8.6 percent, driven mainly by the increase in average salaries even as the average number of employees rose only marginally, up 0.6 percent to 7,541.

KB is one of the largest banking houses in the Czech Republic and is therefore subject to the windfall tax. The measure was approved by the government as a 60 percent surcharge tax on windfall profits, corresponding to the difference between the tax base and the average cost of the tax base over the last four years, plus 20 percent.

Some other banks also reported an annual drop in their Jan-Sept net profits. In the case of Ceska sporitelna, it was by 2.9 percent to Kc14.6bn, and Moneta Money Bank saw a fall of 3.7 percent to Kc4bn. On the other hand, the Czech and Slovak UniCredit Bank saw an increase of more than 25 percent in net profit to Kc8.5bn during the period.

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