Group Net Profit for 2004: CZK 6.8 billion (+ 9.2% y/y)
primarily reflects high dynamics in financing housing needs, a systemic growth rate of credits provided to SMEs and sales of mutual funds
In 2004, the ČSOB Group posted consolidated Net Profit of CZK 6.8 billion, which represents an increase of 9.2% y/y. ČSOB (the bank) reported a capital adequacy ratio (CAR) 12.11 %. Return on average equity (ROAE) increased to 15%.
Figures disclosed in this release are based on audited, consolidated financial statements as of 31. 12. 2004 according to IFRS.
The ČSOB Group confirmed its strength in financial services, and, in every area of its business activities, it has taken a significant market position (market share): 1st place in construction savings (both deposits and loans), 1st place in the leasing market, 1st place in sales of guaranteed funds and, according to the Global Finance magazine, it is also the Best Bank of the Year in the Czech Republic and the Best Foreign Exchange Bank of the Year in the Czech Republic.
The growth in profit was driven by strong, overall growth of business across customer segments, and of credit deals in particular. Overall, the credit portfolio of the ČSOB Group reached a volume of CZK 254.9 billion, i. e. + 8% y/y. Credit deals brought interest income in the amount of CZK 14.6 billion (+6% y/y), and it generated fees in the amount of CZK 0.6 billion (+18% y/y).
The greatest portion of newly provided loans was directed to financing housing needs. The ČSOB Group provided new mortgage loans in the amount of CZK 12 billion and construction savings loans at the record level of CZK 19.5 billion. This caused the Group´s overall exposure in financing housing to increase by over 40% to CZK 65.5 billion. The Group managed to maintain a 32%-market share, which gaved it position of the No.1 housing financier in the Czech Republic.
In the segment of small and medium-sized enterprises (SME), ČSOB increased the number of clients for whom it is a bank of the first choice – from 20% to 25%. It achieved this by combining simplified credit procedures, discounted fees for europayments and automated payments, introduction of “F/X nests” in the regions and advisory services oriented towards European funds. The portfolio of SME credits grew by 34% y/y, i. e. by CZK 4.5 billion, while the quality of assets was maintained. The income generated in this segment showed the highest growth rate: + 5 % y/y.
The ČSOB Group continues to be an important client´s wealth manager. The volume of assets under management reached CZK 530.5 billion. In wealth management for retail clients, it has taken, overall, a 29%-market share. The growth rate of private individuals’ investments into mutual funds doubled that of the market growth, so ČSOB’s market position was further strengthened. Investments into funds grew by CZK 9.8 billion to CZK 32.9 billion, i.e. by +43% y/y (without „ex-privatisation funds“). The Group also confirmed its unrivalled position in sales of capital guaranteed funds, which grew by 60% y/y. ČSOB thus holds the first position with a 69% market share.
Income from financial operations grew by +11% y/y to CZK 4.3 billion, while ČSOB strategically focused on deals undertaken for clients (income of CZK 3.0 billion) and, to a lesser extent, on proprietary deals (income of CZK1.3 billion). ČSOB´s dealing room continues to be a prime workplace in the Czech Republic with the average daily turnover over CZK 80 billion (over EUR 2.5 billion).
Income from payment cards transactions showed a significant growth: + 20% y/y amounting to CZK 0.6 billion. ČSOB remained to be the second-largest cards issuer. The growth of income from the transactions relates to the fact that ČSOB has become the largest operator of payment terminals placed at merchants in the Czech Republic; their number has reached 8,942. The number of transactions made with payment cards on them grew by +12% y/y.
The bancassurance concept also successfully developed, and the growth of insurance premiums was quicker than in 2003. Life insurance recorded an almost double growth (by over CZK 326.6 million y/y), insurance of payment cards and insurance of retail credits and mortgage loans grew by more than a third.
Slovakia. The ČSOB Group also increased its credit activities in the Slovak Republic, where business trends more or less copied that in the Czech Republic. The volume of credits provided to small and medium-sized enterprises in Slovakia reached SKK 3.7 billion (+39% y/y), consumer loans grew by almost a third (SKK 1.9 billion, +27% y/y) and mortgages grew dynamically (SKK 1.4 billion, +106% y/y). Capital guaranteed funds met with a very good market response; their net sales grew by +47% y/y and reached the amount of SKK 2.4 billion. The expansion of credit activities was boosted by the growth of the Retail/SME distribution network. This network now comprises 78 branches.
Group Operating Income, indicating the Group business activity, reached CZK 25.7 billion. In it, the retail segment participated with a 26% share, the SME-segment with 17%, the corporate segment with 11%, subsidiaries participated with 22% and Slovak operations with 9%.
Group Operating Profit reached CZK 9.58 billion, i. e. +32% y/y, while the effect of extraordinary (one-off) items was limited-to a lesser extent; profit was also affected by recoveries of historic bad debts.
Due to a strong business growth, the Cost-to-Income Ratio (C/I) improved significantly from 67.2% in 2003 to 61.6%.