KB’s 9M2005 net income ahead of consensus
Komercni banka has reported earnings of CZK 2,129m, up 17.0% y/y but down 5.4% q/q, ahead of both the consensus estimate of CZK 2.04bn (by 4.4%) and our own forecast of CZK 2,096m. Note that the decline versus last quarter, mainly as a result of lower one-off gains, was widely expected. Indeed, the level of dividends and other income dropped by 40% q/q to CZK 85m and the profit on subsidiaries and associates dropped by 70% q/q to CZK 78m. Revenue growth is uninspiring (net interest income up 6.0% y/y but down 0.1% q/q, fee income up 1.9% y/y but down 1.4% q/q) but we believe the overall picture presented for 3Q05 will be seen as positive, with strong volume growth in key segments (i.e. retail lending, with mortgages up +40.5% y/y and consumer loans +18.9% y/y), and we reiterate our Buy rating on the stock, with an estimated fair value of CZK 3,967 per share.