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Komercni Banka says 2013 profit falls 10.2% as low rates hurt revenue, plans flat dividend.

February 16, 2014

Komercni Banka, the Czech Republic's third-largest lender by assets, said attributable net profit fell 10.2% on the year to CZK 12.5bn (EUR 454.3mn) in 2013 as extremely low market interest rates and intense competition weighed on the bank's revenue. The reading was in line with market expectations.

The net banking income dropped by an annual 5.4% to CZK 30.9bn last year as the net interest income declined by 3.5% y/y to CZK 21.2bn and income from financial operations plunged by 31% offsetting a 1.5% hike in the income from fees and commissions to CZK 7.7bn. The net interest income declined despite expanding loan and deposit portfolio as very low market interest rates put significant pressure on yields from reinvestment of liquidity, the bank said in a statement. The generally subdued economic activity in the Czech Republic and reduced prices for certain banking services also played a role.

The gross volume of loans grew by 4.8% y/y to CZK 491.5bn driven mainly by mortgages, consumer loans and lending to corporations. Business loans were up 4.9% y/y, mortgages to individuals grew 9.7% y/y to CZK 146.2bn and consumer loans rose by 3.8% y/y to CZK 28.5bn. Deposits at the bank rose by 9.1% y/y to CZK 649.2bn as of end-2013.

Operating costs were trimmed by 2.5% y/y to CZK 13.1bn in 2013 with cost of risk falling by 7.1% y/y to CZK 1.7bn.

In the fourth quarter alone, Komercni Banka posted a net profit of CZK 2.97bn, down 2.1% on the year, also in line with market expectations.

The board of directors will propose the payment of a CZK 230 dividend per share for 2013, the same as in the previous year.  If approved by the shareholders, total dividend payout will stand at CZK 8.7bn.

Komercni Banka, majority owned by France'sSociete Generale, operates a network of 398 branches countrywide serving 1.6mn clients.


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Source: IntelliNews - Weekly Reports

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