During the analyst call yesterday after market hours the bank gave a more detailed outlook for 2013. It expects flattish revenues, flattish costs and normalization of cost of risk to a more mid-cycle level. This should result in lower net profit in 2013. The management estimates 2013 ROE in range of 13-15%. Importantly, the guidance for retail cost of risk sounded more upbeat following its significant decrease in 3Q12 and 4Q12. The bank has improved its perception of “sustainable” mid-cycle level of cost of risk from previously guided 80-100 bps to a level below 80 bps. /Although we still expect the bank’s net profit to decline this year by 8.5% we increased our estimate by some 5.4% to 12.77 bln CZK, 2.8% above the consensus estimate. Better outlook for retail cost of risk also prompted us to increase our net income estimate for 2014 and 2015 by 2.7% and 2.4% respectively. We increase our TP to 4 021 CZK from 3 800 CZK. CEO Henri Bonnet of Komercni banka said in an interview for local press that his bank expects the first signs of recovery of the Czech economy to come in the second quarter of this year. KB’s optimism, he said, derives from the improved atmosphere in Germany, as measured by the ZEW index. He also said that some banks might pull out of the CR this year and that he can imagine acquiring them.