REG - Komercni Banka - 3rd Quarter Results
03/11/2023 07:15
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RNS Number : 2609S Komercni Banka 03 November 2023
Komercni banka, a.s. http://www.kb.cz/en (http://www.kb.cz/en)
Prague 1, Na Prikope 33, building identification number 969, Post Code 114 07
Identification No.: 45 31 70 54
LEI Code: IYKCAVNFR8QGF00HV840
incorporated in the Commercial Register maintained with the Municipal Court in
Prague,
section B, insert 1360
Disclosed on 3 November 2023 at 7:00 a.m. CET
Pursuant to Prague Stock Exchange Rules part III subsection 7(6)(a) and Act
256/2004 (Czech) Coll. subsections 125(1) Komercni banka, a.s. discloses
obligatory published information - Financial Results as of 30 September
2023.
Detailed information is available at the following link:
https://www.kb.cz/en/about-the-bank/for-investors-directory
(https://www.kb.cz/en/about-the-bank/for-investors-directory)
Regulatory Information
Results
9M 2023
KB in three quarters of 2023: Solid delivery amidst stagflationary economy
"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.
Gradual enrichment of the offer available in the new KB+ application by the
addition of simple, advantageous, and attractive services will let us increase
the number of clients switching from the legacy platform. 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," remarked Jan Juchelka, Komerční banka's Chairman of the Board of
Directors and Chief Executive Officer.
"Besides developing the new client proposition and technological systems of
the Bank, the strategic transformation involves changes to the organisation of
KB Group in order to make it more effective and efficient. In recent months,
we have integrated operational functions of Factoring KB with those of the
Bank, have been building a new sales force for KB Group based on the
distribution network of Modrá pyramida, and we are streamlining development
and marketing of consumer loans from a single centre for the whole Group.
Successful implementation of our KB 2025 strategic programme will reinforce
KB's position as a leader in the New Era of Banking," Jan Juchelka added.
KB Group's lending to customers up by 2.7% year on year, at
CZK 808.3 billion.
Deposits from clients grew by 1.2% from a year earlier to
CZK 1,022.4 billion. Year to date, client deposits are higher by 11.5%.
Volume of non-bank assets (mutual funds, pension funds, life insurance) under
management expanded by 14.7% to CZK 240.7 billion.
KB Group was serving 2,218,000 clients. Standalone Komerční banka had
1,665,000 customers, up by 14,000 year on year.
Following introduction of the 'New Era of Banking Written by KB' in April,
more than 50,000 clients had enrolled for KB's new digital bank by September
2023.
Nine months of 2023: Total revenues were down by (6.9%) year on year to
CZK 27.0 billion. Operating expenditures increased by 7.7% to
CZK 13.0 billion. The Group reported a CZK (1.0) billion net release of
provisions for credit risk. Net profit attributable to the Group's equity
holders, at CZK 12.4 billion, was down by (4.9%) year on year.
Third quarter 2023: Total revenues decreased by (9.5%) year on year to
CZK 8.9 billion. Operating expenditures rose by 7.2% to CZK 3.9 billion.
The Group reported a CZK (0.1) billion net release of provisions for credit
risk. Net profit attributable to the Group's equity holders, at
CZK 4.3 billion, was lower by (8.5%) year on year.
Volume of regulatory capital reached CZK 106.5 billion, capital adequacy
stood at 20.2%, and the Core Tier 1 ratio was 19.6%.
KB had 72,934 shareholders (greater by 5,576 year on year), of which 66,869
were private individuals from the Czech Republic.
Prague, 3 November 2023 - Komerční banka reported today its unaudited
consolidated results for the first nine months of 2023.
Business and financial performance
Lending to clients went up by 2.7% to CZK 808.3 billion.(( 1 (#_ftn1) ))
The volume of housing loans outstanding grew by 3.8%, with lending from Modrá
pyramida building society expanding faster than did KB's mortgage portfolio.
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.
Despite a seasonal slowdown in summer, the growth in consumer lending was
quite dynamic as KB improved its sales process and consumer confidence in the
economy began to improve from low levels.
Growth in lending to businesses reflected subdued investment activity of
corporations, lower need for working capital financing following normalisation
in global supply chains, effects of FX rate fluctuations on the CZK value of
euro-denominated business loans, and a selective approach by the Bank.
Deposits from clients improved by 1.2% year on year to
CZK 1,022.4 billion.(( 2 (#_ftn2) )) Since the beginning of 2023, deposits
are up by 11.5%. Meanwhile, the volume of KB Group clients' assets in mutual
funds, pension savings, and life insurance has risen by 14.7% year on year to
CZK 240.7 billion. Clients were looking for greater returns on their money
in saving and term accounts and in mutual funds.
Total revenues reached CZK 27.0 billion, lower by (6.9%) compared to the
first 9 months of the previous year. Net interest income declined, mainly due
to narrower average spreads on deposits and loans. Net fee and commission
income was up modestly, reflecting especially clients' greater transaction
activity and larger investments in mutual funds. Net profit on financial
operations came down slightly from the strong levels of last year, as clients'
hedging and trading activity had gradually moderated in the context of a
sluggish economy.
Operating expenses were up by 7.7%, at CZK 13.0 billion. Personnel expenses
were higher by 8.6%, driven mainly by the increase in average salaries even as
the average number of employees rose only marginally. The full-year levy to
the regulatory funds was unchanged year on year because the CNB adjusted
downwards the aggregate contribution from Czech banks to the Resolution Fund
even as the charge for deposit insurance was greater due to last year's
failure of Sberbank CZ. Increase in administrative costs was driven by
expenses related to real estate, IT, maintenance and marketing, and high
inflation generally. Greater depreciation and amortisation charges reflected
the ongoing investments into digitalisation.
Cost of risk reached a negative CZK (1.0) billion, reflecting a net release
of credit risk allowances. This was made possible by generally low rates of
default in corporate and retail segments and successful recovery on several
larger corporate exposures.
Reported net profit attributable to shareholders for 2023's first three
quarters decreased by (4.9%) year on year to CZK 12.4 billion. Income taxes
came to CZK 2.7 billion.
Shareholders, capital, and dividends
KB's capital adequacy ratio reached a strong 20.2%, and Core Tier 1 capital
stood at 19.6%. During 2023, the reported capital ratios include interim
profit of the current year adjusted for the 'foreseeable dividend' at the
level of a 65% payout ratio.
The liquidity coverage ratio was 157%, significantly above the regulatory
minimum of 100%.
As of 30 September 2023, Komerční banka had 72,934 shareholders (up by 5,576
year on year), of which 66,869 (greater by 5,424 from the year earlier) were
private individuals from the Czech Republic. Strategic shareholder Société
Générale maintained its 60.4% stake while minority shareholders owned 39.0%
and KB held 0.6% of the registered capital in treasury.
Market environment (in third quarter 2023)(( 3 (#_ftn3) ))
If not perhaps fully resolved, many of certain challenges facing the global
economy in the recent past have at least moved off or faded from the radar,
but the economic picture continues to be weakened by high interest rates and
general economic uncertainty. The main domestic focal point of macroeconomic
discussion has been fiscal policy, the key issues being impact of the
austerity (or consolidation) package first presented by the Czech government
in early May and subsequent preparation of the government budget for 2024.
This package has passed the lower house of the Parliament and discussion in
the Senate (upper house of the Parliament) will follow. The 2024 budget has
only recently started its way through three readings in the lower house of the
Parliament which is the only chamber voting on the budget.
Otherwise, the Czech economy had stagnated quarter on quarter in the second
quarter. In the third quarter, then, real GDP declined by (0.3%) quarter on
quarter and came in (0.6%) smaller year on year as per the flash estimate.
Economic activity was hindered mainly by weak household consumption and
investments, while net exports contribute positively to year on year decline,
but negatively to quarter on quarter. Manufacturing sector shrunk slightly
year on year during 2 months of 2023's third quarter. However, car production
in 2023's first nine months was higher by 12% year on year. Labour market
conditions remained tight, but nominal wage growth did not keep up with rising
consumer prices.(( 4 (#_ftn4) )) The unemployment rate remains one of the
lowest within the EU, standing at just 2.5% in August 2023 (according to the
Eurostat methodology after seasonal adjustment).(( 5 (#_ftn5) )) In
September, the Czech labour ministry reported stagnation in the unemployment
rate at very low levels.(( 6 (#_ftn6) ))
Pressure from the primary price categories was gradually fading during the
third quarter of 2023. The growth dynamics of industrial producer prices
averaged just 1.3% year on year. Quarter-on-quarter dynamics were negative, at
(0.3%). Agricultural producer prices were lower by (24.7%) year on year and on
a quarter-on-quarter basis by (8.6%). Prices of construction work continued to
rise by an average 3.7% year on year (0.3% from the second quarter of 2023 to
the third quarter of 2023). Diminishing pressure from primary prices together
with only decent wage cost dynamics and further retreating energy prices
moderated the rise in consumer prices and the year-on-year price dynamics were
once again influenced by the base effect. Hence, growth in consumer prices
decelerated in September to 6.9% year on year. The dynamics of core inflation
declined to 5.0% in September.(( 7 (#_ftn7) ))
The CNB has left the main 2W monetary policy repo rate on hold at 7% since 23
June 2022. As of 29 September 2023, 3M PRIBOR stood at 7.09%, down (16) bps
year on year and (17) bps year to date. The 10Y interest rate swap followed
recently increasing global interest rates and hit 4.53% (off (56) bps year on
year and (26) bps year to date). The interest rate swap curve remained still
slightly inverted, with the 5Y measure at 4.63% (lower by (91) bps year on
year and (60) bps year to date) and yields on 10-year Czech government bonds
having eased to 4.85% (down (39) bps year on year and (18) bps year to date)
by the end of September. The Czech crown had depreciated against the euro by
0.9% year to date but appreciated by 0.9% year on year, reaching CZK 24.3 per
euro.
The latest information on residential real estate prices, available for the
second quarter of 2023 from the Czech Statistical Office, showed prices
declining in all relevant segments of the residential real estate market both
in quarterly and year-on-year terms.(( 8 (#_ftn8) )) Prices for second-hand
homes in Prague slipped by (3.1%) quarter on quarter and were lower by (3.6)%
as compared to the previous year's second quarter. Prices of second-hand flats
in the rest of the country were down by (2.5%) quarter on quarter and were
(4.2)% lower year on year. Already for the fourth consecutive quarter, prices
were down quarter on quarter for newly developed flats in Prague. Those prices
slipped by (0.5%) in the second quarter of 2023 and fell by (6.9%) from the
same quarter a year earlier.6) Czech residential real estate prices according
to the European house price index(( 9 (#_ftn9) )) were down quarter on
quarter by (0.4%) and year on year by (2.9%).
Total bank lending for the overall market (excluding repo operations) grew by
5.4% year on year as of September 2023.(( 10 (#_ftn10) )) Lending to
individuals rose by 5.0%, with housing loans expanding 4.4% year on year as
new mortgage production was recovering from the drop in 2022 in spite of
interest rates remained at heightened levels. Lending to businesses and other
corporations increased year on year by 5.8% in September 2023, with growth
recorded across all main segments, and mainly in euro-denominated loans.
The volume of client deposits in Czech banks expanded by 8.0% year over year
as of September 2023.(( 11 (#_ftn11) )) Deposits from individuals had grown
in total by 6.5% while the market deposits from businesses and other
corporations grew by 9.6% year over year. A switch from current to term and
saving deposits moderated, but the volumes on current accounts were (8.3%)
lower while the volume on term deposits swelled by 27.9% year on year and
saving accounts added 26.3% as compared to the same month a year earlier.
Progress in implementing KB 2025 strategic plan in its third year
On 5 November 2020, Komerční banka had presented its KB Change 2025 plan
updating strategic directions and addressing emerging challenges and
opportunities for creating a strong, client-focused bank. Komerční banka
aims to build together with its clients a better and sustainable future
through responsible and innovative financial solutions. It aspires to be a
leader in a new era of banking for 2 million active clients. The Bank has
delivered further tangible progress in the areas covered by KB Change 2025 in
the past 12 months.
A cornerstone of the transformation programme consists in building a new
digital banking infrastructure that includes a new core banking system, the
KB+ mobile application, internet banking, a card management system, and
analytical tools allowing an upgraded client proposition.
By April 2023, the construction of this new digital bank had reached such
advanced level as to allow introducing the "New Era of Banking Written by KB"
onto the Czech market, onboarding of new clients to the new platform, and the
start of a gradual migration of clients from the legacy system.
More than 50,000 clients had enrolled into the new digital bank by September
2023. Of this total, over 8,000 were new clients to KB. The migration that has
commenced in the Individuals segment will be followed in 2024 by that for
entrepreneurs and later also by the corporate clients segment. This schedule
is in accordance, too, with the development of new products and services for
the "New Era of Banking Written by KB".
KB also deployed the new TSYS Prime card processing platform in an application
outsourced to Global Payments Europe. This enhances security and processing
efficiency while offering additional options for card administration.
Komerční banka continued its payment systems transformation and payment
processing centralisation into the Payment Hub application from Valantic. The
processing of all card transactions was redirected to the Payment Hub
application.
The advancements in building the new digital bank for clients in retail
segments will enable KB to progressively refocus its development capacities on
services and systems in the new digital bank for corporate clients.
Consistent with KB's targets, the prevalence of digital sales has been gaining
traction. In the first 9 months of 2023, the share of products digitally sold
within the Individuals segment reached 34.2% of total sales, up by 11
percentage points year on year. Within this total, 26.5% of products were sold
in an end-to-end digital manner. That was 10 percentage points greater
compared to a year ago. End-to-end digital sales of consumer loans came to 70%
of total sales. End-to-end digital sales of subscription plans in the New Era
of Banking reached 59% of total sales.
In order to procure new revenue sources, KB has been building an ecosystem of
complementary financial services through a combination of internal
development, co-operation with start-up as well as established providers, and
even acquiring participations in fintech companies via its fully owned KB
Smart Solutions platform.
KB SmartSolutions has acquired participations in such dynamic Czech fintech
projects as Upvest, Roger, and Lemonero. It also has facilitated launch of the
internal start-ups KB Advisory and Finbricks.
In addition, KB SmartSolutions acquired ownership in Enviros, a leading Czech
energy and environment advisory providing its services to a number of
important companies in Central Europe. This company is now developing
synergetic co-operation with KB Advisory and with KB's EU Point teams in the
highly demanded areas of energy efficiency and sustainability.
Some 8,000 clients invested almost CZK 8 billion in real estate projects via
the Upvest crowdfunding platform. Turnover of the Roger online factoring
platform increased by 30% year on year. The Lemonero online provider of
financing to e-shops based on AI-powered scoring have entered markets of
Benelux countries. Finbricks' open-banking aggregation platform has introduced
a new direct payment service and it includes leading global payment gates
among its customers.
The project of building a single mortgage factory for both KB and Modrá
pyramida has progressed significantly, too. The new core and front office
system for KB Group has just been put into operation. In a preceding step, all
housing loan experts were integrated into Modrá pyramida.
KB is striving to reinforce its market leadership position in services for
corporate clients. Communication between the Bank and corporate clients is
gradually being digitised. KB is also administering new programmes of the
European Investment Fund for advantageous financing of business and public
institutions. KB's Investment Banking is developing new digital tools for
hedging and trading activities of clients.
In addition to being perceived as a green bank in the Czech Republic, it is
KB's strategic ambition to be a leader in sustainable banking on the Czech
financial market and within the SG Group. Komerční banka intends to do its
part to protect the climate by supporting a fair, environmentally friendly,
and inclusive energy transition, even as it acknowledges that not all energy
sources are equivalent in their costs to consumers and that the energy sector
represents thousands of jobs.
The Bank is committed to limiting global warming and to reducing its direct
emissions (scopes 1 and 2) in accordance with the 1.5°C scenario from the
Paris Agreement. KB will contribute to carbon removal projects with a view to
reaching carbon neutrality by 2026. In 2022, total emissions decreased by 44%
(to 13.5 kilograms per client of CO2 equivalent) compared to the reference
year 2019. Measurement is audited on a yearly basis by the non-profit
Preferred by Nature.
As of 30 September 2023, the outstanding volume of loans with sustainable
positive impact expanded by 32.7% to CZK 53.3 billion.
Furthermore, Komerční banka has committed to progressively reducing to zero
by 2030 its exposure to projects actively associated with the coal sector. On
this basis, the Bank no longer provides new financial products to clients
having more than 25% of their revenues linked to the thermal coal sector and
not having communicated a time-bound coal phase-out plan aligned with
Société Générale's 2030/2040 thermal coal phase-out objectives.
As part of its risk management framework, KB has been developing its
environmental and social risk management, including climate vulnerability
assessment, and is building a data collection and analytical infrastructure
for indicators related to clients' ESG factors. As an important enabler for
stronger origination of consumer loans in fully digital customer journeys, the
Group will this year deploy a digital income verification and solvency
assessment tool. KB has also reinforced its capabilities in the area of
digital fraud risk management for retail segments.
In order to assure and develop key internal know-how more effectively, KB has
insourced several dozen experts with specific development and analytical
skills. It has also consolidated a number of internal incubator programmes for
nurturing internal tech talent.
Optimisation of operations through digitalisation, branch reduction and
switching to cashless banking, automation of middle- and back-office and
support functions, and robotics deployment will mean that the standalone
bank's full operations and services will be handled by approximately 5,500
employees. This compares with 7,210 employees in the Bank as of 31 December
2019. The average number of employees through 9 months of 2023 decreased by
7.7% compared to the average in the reference year 2019.
Although the branch will remain an important contact point for clients, as the
trend in providing services increasingly involves migration to digital
channels, the Bank aims to have just 200 branches by the strategy's horizon.
As of 30 September 2023, the number of branches stood at 212, down by 38.0%
from 342 as of 31 December 2019.
KB also agreed with Moneta Money Bank, UniCredit Bank, and Air Bank on sharing
of their ATM networks for clients' withdrawals. This initiative has brought
better access to financial services for clients in less densely populated
areas, as well as improved sustainability and efficiency in operating the ATM
networks of all the participating banks. KB has agreed with the partner banks
also to share the deposit function of ATMs from 2024.
Operational efficiency is being boosted by centralisation of additional key
functions across KB Group. Effective from 2023, the support functions of
Factoring KB have been completely outsourced to the Bank. The Group is also
finalising its Group Consumer Lending project, which will simplify the product
portfolio in the consumer finance area across the Group, harmonise omnichannel
distribution, and increase effectiveness of product development and marketing.
On the basis of the sales agents network of Modrá pyramida, the Group will
also launch a complementary distribution network, branded KB Poradenství, for
the Group's products.
The plan's operational targets, which are formulated for the standalone bank,
have been affirmed. KB aims to increase the level of client satisfaction as
measured by Net Promoter Score (NPS) in the retail clients and small and
medium-sized enterprises segments while stabilising that satisfaction at the
already very high level (above 50 points) within the large corporations
segment.
The measurements in retail segments during 2023 showed a gain in NPS among
individual clients to 45 points from 32 point in 2019 and among small
businesses to 33 points from the earlier 32. At the time of this report's
publication, the agency Ipsos was still completing the NPS measurement in
corporate segments.
Based upon organic growth, the clients' seamless omnichannel experience should
help the Bank to achieve its target of 1,850,000 clients by 2025. As of 30
September 2023, KB was serving 1,665,000 clients.
The upgraded working and management methods are leading to employee
empowerment and effective teamwork across the entity. KB is maintaining the
Smart Office concept of hybrid work from office and home, developing the
Mojevitalita programme promoting and supporting healthy life styles, and
offering medical assistance as well as legal and life counselling for all
colleagues. Effective leadership should help to achieve further gains in
employee engagement levels as measured by a proprietary blended index to the
level of 83 points from a strong 78 points in 2019. The employee engagement
index's 2023 measurement stood at 78 points.
KB believes that pursuing sustainability in business and operations generates
long-term benefits in delivering new business and value for shareholders as
well as compliance with future Czech and European regulations. As a measure of
its maturity in the environmental, social, and governance areas, KB has
selected the globally recognised FTSE4Good index of sustainably managed
companies. Its target will be to exceed the level of 4 points. The Bank's
index stood at 3.7 in 2023, up by 0.4 points in comparison with 2021. In
accordance with MSCI ESG measurement, meanwhile, KB was rated at the 'AA'
level, which is reserved for companies leading their respective industries in
managing the most significant ESG risks and opportunities.
Financial targets have been set on a KB Group basis, and management is
striving to reach these targets despite several headwinds unforeseen at the
time of setting these goals in 2020.
For 2025, the cost-to-income ratio is targeted to approach 40%. Based upon
organic growth, the Group's revenues should accelerate mainly in 2025. By that
time, KB's new digital bank will be fully operational for retail clients, a
boost will come through digital sales and an advisory model supported by data
analytics, and new revenue sources will be coming online.
Operating expenditures in 2025 will be at a level similar to that in 2023 and
will reflect ongoing efficiency measures, a lower number of employees, as well
as a smaller expected regulatory charge in 2025 for the Resolution Fund.
Savings from decommissioning old components of the banking infrastructure
should begin to accrue mainly from 2026.
The potential for increase in net profitability of the Group has been severely
limited, however, by imposition of the so-called "windfall tax" at an
incremental 60% rate. Thus, any profits exceeding a defined threshold would be
taxed at a 79% rate (81% from 2024) that is the sum of the 19% (21% from 2024)
statutory rate plus the "windfall tax".
With a view to reinforcing the scale of KB's existing business and thus
optimising efficiency and competitiveness, KB's management remains ready to
consider enhancing its performance with non-organic growth elements.
Nevertheless, visibility regarding potential accretive acquisition
opportunities is limited at the time of publishing this release. The minimum
ambition for the number of bank clients inclusive of the non-organic growth
component has been set at 2,000,000.
The Group will grow the volume of risk-weighted assets at a pace that is
optimal from the perspective of creating shareholder value. The volume and
structure of regulatory capital will be further optimised, even as it will at
all times safely and assuredly meet the applicable and expected regulatory
requirements.
Assuming all those factors as described above, KB Group targets ROE to come in
around 15% for 2025.
Key risks to these targets include significant worsening of the geopolitical
situation (in particular, escalation of the war in Ukraine), worsening of
macroeconomic development, unexpected increase in regulatory requirements and
bank levies, and adverse competitive dynamics.
Developments in the client portfolio and distribution networks
30 Sep 2022 30 Sep 2023 Change
YoY
KB Group's clients 2,246,000 2,218,000 (28,000)
Komerční banka 1,651,000 1,665,000 14,000
- individual clients 1,407,000 1,421,000 14,000
- internet banking clients 1,509,000 1,509,000 0
- mobile banking clients 1,122,000 1,191,000 69,000
Modrá pyramida 464,000 438,000 (26,000)
KB Penzijní společnost 509,000 482,000 (27,000)
ESSOX (Group) 133,000 132,000 (1,000)
KB branches (CZ) 218 212 (6)
Modrá pyramida points of sale 195 201 6
SGEF branches 9 9 0
ATMs (KB network) 862 821 (41)
- of which deposit-taking 521 521 0
- of which contactless 643 679 36
ATMs (Total shared network) 1,420 2,012 592
Number of active debit cards 1,464,000 1,499,000 35,000
Number of active credit cards 191,000 212,000 21,000
Number of cards virtualized into payment apps 480,000 636,000 157,000
KB key authentication users 1,065,000 1,166,000 100,000
Comments on business and financial results
The financial data published below are from unaudited consolidated results
compiled under IFRS (International Financial Reporting Standards). Unless
stated otherwise, the data are as of 30 September 2023.
BUSINESS PERFORMANCE
Loans to customers
Total gross volume of lending to clients rose by 2.7% year on year to
CZK 808.3 billion.(( 12 (#_ftn12) ))
In lending to individuals, the overall volume of housing loans grew by 3.8%
from the year earlier. Within this total, the portfolio of mortgages to
individuals expanded by 2.4% to CZK 273.5 billion. Modrá pyramida's loan
portfolio developed even faster, by 8.2% to CZK 90.6 billion. The sales of
housing loans in the first 9 months of 2023 were lower by (24.8%) in
comparison with the same period of 2022, at CZK 25.2 billion. These sales
had been recovering since March, however, and production in the standalone
third quarter was already higher by 27.2% year on year. The volume of KB
Group's consumer lending (provided by the Bank and ESSOX Group in the Czech
Republic and Slovakia) was up by 6.9%, at CZK 37.0 billion. This growth pace
was also influenced by improvements in the granting process and successful
offer of flexible loans available online and at branches.
The total volume of loans to businesses and other lending provided by KB Group
was greater by 1.4% year on year, at CZK 407.1 billion. Lending to small
businesses remained flat at CZK 47.4 billion. The overall CZK volume of
credit granted by KB to medium-sized, large corporate, and other clients in
the Czech Republic and Slovakia(( 13 (#_ftn13) )) climbed by 1.1% year on
year to CZK 326.5 billion. At CZK 33.2 billion, the total credit and
leasing amounts outstanding at SGEF were up by 5.9% year over year.
Amounts due to customers and assets under management
The volume of standard client deposits within KB Group increased by 1.2% year
on year to CZK 1,022.4 billion.(( 14 (#_ftn14) )) Year to date, the volume
grew by 11.5%. The year-on-year growth was mainly driven by deposits from
corporate clients. Clients were often investing their savings in mutual funds
and they also have been switching their deposits from current accounts to
better-yielding term and savings accounts.
Deposits at Komerční banka from individual clients were down by (2.3%) from
the year earlier to CZK 329.0 billion. The deposit book at Modrá pyramida
diminished by (6.8%) to CZK 52.8 billion. Total deposits from businesses and
other corporations were up by 3.9% to CZK 634.0 billion.
The volumes in mutual funds held by KB Group clients grew by 32.5% to
CZK 122.4 billion. Client assets managed by KB Penzijní společnost were
1.8% greater, at CZK 73.4 billion. Technical reserves in life insurance at
Komerční pojišťovna were smaller by (1.2%) year on year, at
CZK 45.0 billion.
The Group's liquidity as measured by the ratio of net loans(( 15 (#_ftn15) ))
to deposits (excluding repo operations with clients but including debt
securities held by KB and issued by the Bank's clients) stood at 79.3%. The
Group's liquidity coverage ratio ended the year at 157%, well above the
regulatory limit of 100%.
FINANCIAL PERFORMANCE
Income statement
Komerční banka's revenues (net operating income) reached
CZK 26,999 million, down by (6.9%) compared to the 9 months of 2022. Net
interest income declined as the impact from narrower average spreads between
deposits and loans was not offset by expanding volumes. Net fee and commission
income was up slightly, driven particularly by clients' larger investments in
mutual funds and greater transaction activity, mainly with payment cards. Net
profit on financial operations was off slightly from the strong level of last
year's first three quarters, as the weak economy began to weigh on hedging and
trading activity of corporate clients.
Net interest income was down by (10.1%), at CZK 19,320 million. The volume
of loans expanded, but the average lending spreads narrowed. Switching of
deposit volumes from current accounts to savings and term deposits, together
with higher rates paid on deposit products, led to significantly higher
average costs of deposits. Contribution to net interest income from investment
banking activities diminished slightly due to smaller differences between
Czech crown interest rates and those in other currencies. Net interest margin
for the 9 months of 2023, computed as the ratio of net interest income to
interest-earning assets reported on the balance sheet, reached 2.0%. That
compares to 2.3% a year earlier.
Net fee and commission income grew by 3.4% to CZK 4,597 million. Transaction
fees contributed to this development, as clients' transaction activity was
greater, especially in card payments but also in other non-cash payments.
Deposit product fees were up slightly, as the base from last year was
influenced by a humanitarian allowance for war refugees from Ukraine. Fees
from cross-selling improved as well, with better contribution from mutual
funds and insurance products. Income from loan services was higher, mainly due
to expanded consumer lending. Because clients' activity on debt capital
markets was diminished year on year, less income was generated from the
related services.
Net profit on financial operations decreased by (2.5%) year on year to
CZK 2,839 million. This solid result was achieved on the back of client
activity in currency and interest rate hedging and trading, although that was
slowing in the third quarter as the economy turned sluggish. A few larger
transactions executed for corporate and institutional clients contributed
positively. Small and medium-sized corporate clients continued to appreciate
tailored hedging strategies, and particularly those based on currency options.
Gains from foreign exchange payments were lower year on year, reflecting
seasonality of travel, transaction activity of clients, and spreads
adjustments. The result also included gain from sales of bonds reported on the
banking book.
Dividend and other income was up by 66.4% to CZK 243 million. This line item
primarily comprises revenues from property rental and ancillary services.
Operating expenses rose by 7.7% to CZK 13,013 million. Reflecting a combined
rise in average salaries and 0.6% increase in the average number of employees
to 7,541, personnel expenses grew by 8.6% to CZK 6,222 million(( 16
(#_ftn16) )) General and administrative expenses (not including contributions
to the regulatory funds) were up by 7.0%, at CZK 3,009 million. Growth in
this category was driven by marketing, software and IT support, as well as
costs related to real estate and overall inflation. The full-year charge to
the regulatory funds (Deposit Insurance Fund, Resolution Fund) was lower by a
slight (0.2%) year on year, at CZK 1,284 million, because the CNB reduced
the Czech banks' aggregate contribution to the Resolution Fund in 2023. The
levy for the Deposit Insurance Fund was increased, however, following last
year's failure of Sberbank CZ. Depreciation, amortisation, and impairment of
operating assets grew by 11.0% to CZK 2,498 million, driven by higher
charges reflecting investments in pursuit of KB's digitalisation strategy.
The sum of profit before allowances for loan losses, provisions for other
risk, profit on subsidiaries, and income tax (operating profit) was down by
(17.4%), at CZK 13,986 million.
Cost of risk (impairment losses, provisions for loans, and net result from
loans transferred and written off) reached CZK (1,037) million (i.e. a net
release of provisions) compared to net provisions creation of
CZK 1,231 million a year earlier. The level of new defaults remained
relatively low across all client segments and the Group achieved successful
recoveries relating to several exposures in the corporate client segment. Net
provisioning in retail segments remained low. The cost of risk in relative
terms and as measured against the average volume of the lending portfolio
during the 9 months of 2023 came to (16) basis points. That compares with 21
basis points for the same period a year earlier.
Income from shares in associated undertakings (i.e. Komerční pojišťovna)
was up by 26.1% year on year, at CZK 208 million, influenced by interest
rate developments, creation and utilisation of the insurance reserves, and
implementation of the IFRS 17 accounting standard at Komerční pojišťovna.
Net profit on subsidiaries and associates reached CZK 0, compared to CZK 73
million a year earlier, when it had included a gain from revaluation of a
stake in a subsidiary.
Net profits (losses) on other assets reached a negative CZK (6) million. In
the previous year, net profit on other assets had been CZK 136 million. This
line comprises mainly result from sales of buildings and related costs.
Income tax was lower by (8.1%), at CZK 2,693 million.
KB Group's consolidated net profit for the first three quarters of 2023
reached CZK 12,532 million, which was down by (4.6%) in comparison with the
year earlier. Of this total, CZK 179 million was profit attributable to the
non-controlling owners of minority stakes in KB's subsidiaries (up by 20.1%
year on year).
Reported net profit attributable to the Group's equity holders totalled
CZK 12,353 million, which is (4.9%) less year on year.
Other comprehensive income reached CZK (489) million. This derived mainly
from revaluation of some cash flow hedging positions and debt securities.
Consolidated comprehensive income for the nine months of 2023 totalled
CZK 12,043 million, of which CZK 179 million was attributable to owners of
non-controlling stakes.
Statement of financial position
Unless indicated otherwise, the following text provides a comparison of the
balance sheet values as of 30 September 2023 with the values from the
statement of financial position as of 31 December 2022.
Assets
As of 30 September 2023, KB Group's total assets had grown by 15.8% year to
date to CZK 1,512.1 billion.
Cash and current balances with central banks were down by (18.3%), at
CZK 11.6 billion. Financial assets held for trading at fair value through
profit or loss (trading securities and derivatives) decreased by (17.2%) to
CZK 47.4 billion. The fair value of hedging financial derivatives declined
by (36.3%) to CZK 13.7 billion.
Year to date, there was a (37.1%) drop in financial assets at fair value
through other comprehensive income totalling CZK 19.0 billion. This item
consisted mainly of debt securities issued by government institutions.
Financial assets at amortised cost grew by 20.5% to CZK 1,390.9 billion. The
largest portion of this consisted of (net) loans and advances to customers,
which increased year to date by 3.7% to CZK 810.3 billion. A 97.9% share in
the gross amount of client loans was classified in Stage 1 or Stage 2 while
2.1% of the loans were classified in Stage 3 (non-performing loans). The
volume of loss allowances created for amounts due from customers came to
CZK 12.8 billion. Loans and advances to banks climbed by 83.5% to
CZK 428.2 billion. The majority of this item consists in reverse repos with
the central bank. The value held in debt securities was up by 9.4% and reached
CZK 152.4 billion at the end of September 2023.
Revaluation differences on portfolio hedge items totalled CZK (1.8) billion,
lower by (30.6%). Current and deferred tax assets stood at CZK 0.4 billion.
Prepayments, accrued income, and other assets, which include receivables from
securities trading and settlement balances, decreased overall by (3.5%) to
CZK 5.6 billion. Assets held for sale climbed by 791.0% to
CZK 0.8 billion.
Because of Komerční pojišťovna's transition to the IFRS 17 standard,
investments in associates rose by 9.3%, to CZK 2.9 billion, compared to the
2022 year-end restated value of CZK 2.7 billion.
The net book value of tangible assets decreased by (10.9%) to
CZK 7.8 billion. Intangible assets grew by 10.7% to reach
CZK 10.0 billion. Goodwill, which primarily derives from the acquisitions of
Modrá pyramida, SGEF, and ESSOX, remained unchanged at CZK 3.8 billion.
Liabilities
Total liabilities were 17.5% higher in comparison to the end of 2022 and stood
at CZK 1,387.0 billion.
Financial liabilities at amortised cost went up by 19.8% to
CZK 1,257.9 billion. Amounts due to customers comprise the largest
proportion of this sum, and these climbed by 18.3% to CZK 1,124.6 billion.
This total included CZK 102.2 billion of liabilities from repo operations
with clients and CZK 6.8 billion of other payables to customers. Amounts due
to banks increased through the 9 months of 2023 by 39.3% to
CZK 118.7 billion.
Revaluation differences on portfolios hedge items were CZK (46.9) billion.
Current and deferred tax liabilities ended at CZK 1.0 billion, down by
(61.3%). Accruals and other liabilities, which include payables from
securities trading and settlement balances, grew by 1.5% to
CZK 17.1 billion.
The provisions balance was (21.6%) lower, at CZK 0.9 billion. Provisions for
other credit commitments are held to cover credit risks associated with credit
commitments issued. The provisions for contracted commitments principally
comprise those for ongoing contracted contingent commitments, legal disputes,
self-insurance, and the retirement benefits plan.
Subordinated and senior non-preferred debt, at CZK 50.1 billion, was up by
29.4% year to date, as KB continued to subscribe new loans during the first 9
months of 2023 to meet regulatory minimum requirements for own funds and
eligible liabilities (MREL).
Equity
Total equity rose year to date by 0.3% to CZK 125.1 billion, whereas the
positive contribution from the net profit generated in the three quarters was
offset by the volume of the annual dividend paid in May. Values of retained
earnings as well as income from share of associated undertakings were restated
as of the end of 2022 as a result of Komerční pojišťovna's adopting the
IFRS 17 standard. The value of non-controlling interests reached
CZK 3.2 billion. As of 30 September 2023, KB held in treasury 1,193,360
of its own shares constituting 0.63% of the registered capital.
Regulatory capital and other regulatory requirements
Total regulatory capital for the capital adequacy calculation came to
CZK 106.5 billion as of 30 September 2023. Capital adequacy stood at 20.2%.
Core Tier 1 (CET1) capital totalled CZK 103.6 billion and the Core Tier 1
ratio was 19.6%. Tier 2 capital summed to CZK 2.9 billion, which was 0.5% of
risk-weighted assets.
As from 1 October 2023, Komerční banka's overall capital requirements (OCR)
were at approximately 17.4%. The minimum required level of CET1 is 12.6% and
the minimum Tier 1 capital ratio stands at 14.7%.
KB Group's Liquidity Coverage Ratio came to 157% as of 30 September 2023. The
applicable regulatory minimum is 100%.
Effective from 1 January 2023, KB Group is recommended to comply with an MREL
minimum requirement equal to 17.4% of the consolidated total risk exposure and
5.18% of the consolidated total exposure. With effect as of 31 December 2023,
KB Group will have to meet MREL at 21.2% of the consolidated total risk
exposure and 5.91% of the consolidated total exposure. The MREL requirement is
defined as the sum of the amount of loss absorption and recapitalisation.
In addition to the MREL, expressed as a percentage of risk-weighted assets,
the Group must also fulfil the combined capital buffer. According to current
regulations and the criteria from the supervisor, this requirement stood at
6.50% as of 1 October 2023.
Pursuing the so-called "single point of entry" resolution strategy, KB intends
to fulfil its MREL requirements by taking on senior non-preferred loans from
Société Générale S.A. As of 30 September, KB had accepted such loans in a
total principal volume of EUR 1.95 billion.(( 17 (#_ftn17) )) KB Group's MREL
ratio stood at 29.2%.
Developments in the Group structure during the third quarter of 2023
In September, KB Smart Solutions, a fully owned subsidiary of Komerční
banka, increased to 33.171% from 28.256% its stake in MonkeyData s.r.o.
MonkeyData fully owns a subsidiary, Lemonero, s.r.o., which provides financing
to e-shops utilising an AI-powered scoring model.
ANNEX: Consolidated results as of 30 September 2023 under International
Financial Reporting Standards (IFRS)
Reported Recurring
9M 2022* 9M 2023 Change 9M 2022* 9M 2023 Change
YoY
YoY
(CZK million, unaudited)
Net interest income 21,499 19,320 (10.1%) 21,499 19,320 (10.1%)
Net fee and commission income 4,447 4,597 3.4% 4,447 4,597 3.4%
Net profit on financial operations 2,913 2,839 (2.5%) 2,913 2,839 (2.5%)
Dividend and other income 146 243 66.4% 146 243 66.4%
Net banking income 29,005 26,999 (6.9%) 29,005 26,999 (6.9%)
Personnel expenses (5,731) (6,222) 8.6% (5,731) (6,222) 8.6%
General admin. expenses (excl. regulatory funds) (2,812) (3,009) 7.0% (2,812) (3,009) 7.0%
Resolution and similar funds (1,286) (1,284) (0.2%) (1,286) (1,284) (0.2%)
Depreciation, amortisation and impairment of operating assets (2,250) (2,498) 11.0% (2,250) (2,498) 11.0%
Total operating expenses (12,079) (13,013) 7.7% (12,079) (13,013) 7.7%
Operating profit 16,926 13,986 (17.4%) 16,926 13,986 (17.4%)
Impairment losses (1,153) 917 +/- (1,153) 917 +/-
Net gain from loans and advances transferred and written off (79) 120 +/- (79) 120 +/-
Cost of risk (1,231) 1,037 +/- (1,231) 1,037 +/-
Net operating income 15,695 15,024 (4.3%) 15,695 15,023 (4.3%)
Income from share of associated companies 165 208 26.1% 165 208 26.1%
Net profit/(loss) on subsidiaries and associates 73 0 n.a. 73 0 n.a.
Net profits on other assets 136 (6) +/- 136 (6) +/-
Profit before income taxes 16,069 15,225 (5.3%) 16,069 15,225 (5.3%)
Income taxes (2,930) (2,693) (8.1%) (2,930) (2,693) (8.1%)
Net profit for the period 13,139 12,532 (4.6%) 13,139 12,532 (4.6%)
Profit attributable to the Non-controlling owners 149 179 20.1% 149 179 20.1%
Profit attributable to the Group's equity holders 12,990 12,353 (4.9%) 12,990 12,353 (4.9%)
* Restated to reflect IFRS 17.
Statement of financial 31-Dec-22* 30 Sep 2023 Ytd
position
(CZK million, unaudited)
Assets 1,305,304 1,512,109 15.8%
Cash and current balances with central bank 14,190 11,590 (18.3%)
Loans and advances to banks 233,398 428,191 83.5%
Loans and advances to customers (net) 781,463 810,314 3.7%
Securities and trading derivatives 226,848 218,718 (3.6%)
Other assets 49,404 43,296 (12.4%)
Liabilities and shareholders' equity 1,305,304 1,512,109 15.8%
Amounts due to banks 85,176 118,659 39.3%
Amounts due to customers 950,692 1,124,553 18.3%
Securities issued 12,156 12,246 0.7%
Subordinated and senior non preferred debt 38,694 50,083 29.4%
Other liabilities 93,910 81,460 (13.3%)
Total equity 124,676 125,108 0.3%
* Restated to reflect IFRS 17.
Key ratios and indicators 30 Sep 2022 30 Sep 2023 Change year on year
Capital adequacy (CNB) 21.1% 20.2% q
Tier 1 ratio (CNB) 20.5% 19.6% q
Total risk-weighted assets (CZK billion) 525.7 527.6 0.4%
Risk-weighted assets for credit risk (CZK billion) 432.2 433.7 0.3%
Net interest margin (NII / average interest-bearing assets)III 2.3% 2.0% q
Loans (net) / deposits ratioIV 76.9% 79.3% p
Cost / income ratioV 41.6% 48.2% p
Return on average equity (ROAE)VI 13.8% 13.5% q
Return on average Tier 1 capitalVII 16.6% 16.3% q
Return on average assets (ROAA)VIII 1.3% 1.2% q
Earnings per share (CZK)IX 91.7 87.2 (4.9%)
Average number of employees during the period 7,496 7,541 0.6%
Business performance in retail segment - overview 30 Sep 2023 Change year on year
CZK bil.
Mortgages to individuals - volume of loans outstanding 273.5 2.4%
Building savings loans (MPSS) - volume of loans outstanding 90.6 8.2%
Consumer loans (KB + ESSOX + PSA Finance) - volume of loans outstanding 37.0 6.9%
Small business loans - volume of loans outstanding 47.4 (0.0%)
Insurance premiums written (KP) 4.8 (15.9%)
Senior non-preferred loans as of 30 September 2023:
Issue Principal Call option date* Interest rate (ACT/360)
27 Jun 2022 EUR 250m 28 Jun 2027 3M Euribor + 2.05%
21 Sep 2022 EUR 250m 21 Sep 2026 1M Euribor + 1.82%
21 Sep 2022 EUR 250m 21 Sep 2029 1M Euribor + 2.13%
9 Nov 2022 EUR 250m 9 Nov 2025 1M Euribor + 2.05%
9 Nov 2022 EUR 250m 9 Nov 2027 1M Euribor + 2.23%
9 Nov 2022 EUR 250m 9 Nov 2028 3M Euribor + 2.28%
15 Jun 2023 EUR 250m 15 Jun 2026 3M Euribor + 1.70%
15 Jun 2023 EUR 200m 15 Jun 2028 3M Euribor + 2.01%
* Maturity date is one year after the call option exercise date.
Subordinated debt as of 30 September 2023:
Issue Principal Call option date* Interest rate (ACT/360)
10 Oct 2022 EUR 100m 11 Oct 2027 3M Euribor + 3.79%
* Maturity date is 5 years after the call option exercise date.
Financial calendar:
8 February 2024 FY and 4Q 2023 results
3 May 2024 1Q 2024 results
Definitions of the performance indicators mentioned herein:
I. Housing loans: mortgages to individuals provided by KB + loans to
clients provided by Modrá pyramida;
II. Cost of risk in relative terms: annualised 'Allowances for loan
losses' divided by the average of 'Gross amount of client loans and advances',
year to date;
III. Net interest margin (NIM): 'Net interest income' divided by average
interest-earning assets (IEA) year to date. IEA comprise 'Cash and current
balances with central banks' ('Current balances with central banks' only),
'Loans and advances to banks', 'Loans and advances to customers', 'Financial
assets held for trading at fair value through profit or loss' (debt securities
only), 'Non-trading financial assets at fair value through profit or loss'
(debt securities only), 'Financial assets at fair value through other
comprehensive income' (debt securities only), and 'Debt securities';
IV. Net loans to deposits: ('Net loans and advances to customers'
inclusive of debt securities held by KB and issued by the Bank's clients less
'reverse repo operations with clients') divided by the quantity ('Amounts due
to customers' less 'repo operations with clients');
V. Cost-to-income ratio: 'Operating costs' divided by 'Net operating
income';
VI. Return on average equity (ROAE): annualised 'Net profit attributable
to the Group's equity holders' divided by the quantity average group
'shareholders' equity' less 'Minority equity', year to date;
VII. Return on average Tier 1 capital: annualised 'Net profit attributable to
the Group's equity holders' divided by average group 'Tier 1 capital', year to
date;
VIII. Return on average assets (ROAA): annualised 'Net profit attributable to
the Group's equity holders' divided by average 'Total assets', year to date;
IX. Earnings per share: annualised 'Net profit attributable to the Group's
equity holders' divided by the quantity average number of shares issued minus
average number of own shares in treasury.
Reconciliation of 'Net interest margin' calculation, (CZK million,
consolidated, unaudited):
(source: Profit and Loss Statement) 9M 2023 9M 2022
Net interest income income, year-to-date 19,320 21,499
Of which:
Loans and advances at amortised cost 47,647 36,489
Debt securities at amortised cost 3,286 2,243
Other debt securities 371 419
Financial liabilities at amortised cost (27,215) (14,231)
Hedging financial derivatives - income 35,902 25,763
Hedging financial derivatives - expense (40,671) (29,185)
(source: Balance Sheet) 30 Sep 2023 31 Dec 2022 30 Sep 2022 31 Dec 2021
Cash and current balances with central banks / Current balances with central 3,983 6,167 16,782 21,455
banks
Loans and advances to banks 428,191 233,398 420,753 257,196
Loans and advances to customers 810,314 781,463 776,560 724,587
Financial assets held for trading at fair value through profit or loss / Debt 12,645 9,968 13,232 8,696
securities
Non-trading financial assets at fair value through profit or loss / Debt 0 132 133 135
securities
Financial asset at fair value through other comprehensive income (FV OCI) / 18,911 30,119 30,082 35,509
Debt securities
Debt securities 152,355 139,276 128,593 114,078
Interest-bearing assets (end of period) 1,426,399 1,200,524 1,386,136 1,161,656
Average interest-bearing assets, year‑to-date 1,313,461 1,273,896
NIM year-to-date, annualised 1.96% 2.25%
(( 1 (#_ftnref1) )) Including debt securities issued by KB's corporate
clients and held by KB. The volume of reverse repo operations with clients as
of 30 September 2023 as well as of 30 September 2022 was nil.
(( 2 (#_ftnref2) )) Excluding repo operations with clients. The total volume
of 'Amounts due to customers' moved up by 0.4% to CZK 1,124.6 billion.
(( 3 (#_ftnref3) )) Unless stated otherwise, data sources for this section:
Czech Statistical Office, Czech National Bank, KB Economic Research.
Comparisons are year on year.
(( 4 (#_ftnref4) )) The latest available data for the second quarter showed
wage inflation picking up to +7.7% year on year (down by (3.1%) in real
terms).
(( 5 (#_ftnref5) )) Source:
https://ec.europa.eu/eurostat/databrowser/view/EI_LMHR_M/default/table?lang=en&category=euroind.ei_lm
(https://ec.europa.eu/eurostat/databrowser/view/EI_LMHR_M/default/table?lang=en&category=euroind.ei_l)
Data as of August 2023.
(( 6 (#_ftnref6) )) Source: https://www.mpsv.cz/web/cz/mesicni
(https://www.mpsv.cz/web/cz/mesicni) . Data as of September 2023.
(( 7 (#_ftnref7) )) Source:
https://www.cnb.cz/arad/#/en/display_link/single__SCPIMZM09YOYPECNA_
(https://www.cnb.cz/arad/#/en/display_link/single__SCPIMZM09YOYPECNA_) ARAD
statistics of the CNB.
(( 8 (#_ftnref8) )) Source:
https://www.czso.cz/csu/czso/indices-of-realized-flat-prices-2-quarter-of-2023
(https://www.czso.cz/csu/czso/indices-of-realized-flat-prices-1-quarter-of-2023)
Publication code 014007-23, released 13 September 2023.
(( 9 (#_ftnref9) )) Source:
https://ec.europa.eu/eurostat/databrowser/view/prc_hpi_q/default/table?lang=en
(https://ec.europa.eu/eurostat/databrowser/view/prc_hpi_q/default/table?lang=en)
(( 10 (#_ftnref10) )) Source of data on banking market developments: ARAD
statistics of the CNB, www.cnb.cz.
(( 11 (#_ftnref11) )) Source of data on banking market developments: ARAD
statistics of the CNB, www.cnb.cz.
(( 12 (#_ftnref12) )) Including debt securities issued by KB's corporate
clients. There were no reverse repo operations with clients to report as of 30
September 2023 or 30 September 2022.
(( 13 (#_ftnref13) )) Inclusive of factor finance outstanding at Factoring KB
and merchant and car dealers' financing from ESSOX Group.
(( 14 (#_ftnref14) )) Excluding volatile repo operations with clients. The
total volume of 'Amounts due to customers' increased by 0.4% year on year to
CZK 1,124.6 billion.
(( 15 (#_ftnref15) )) Gross volume of loans reduced by the volume of
provisions for loan losses.
(( 16 (#_ftnref16) )) Recalculated to a full-time equivalent number.
(( 17 (#_ftnref17) )) An overview of senior non-preferred tranches to meet
the MREL requirements is provided in the Annex.
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