Komercni banka’s unconsolidated Q1 2002 IAS net profit stood at CZK 1.28 bil., in line with market consensus and above our forecast of CZK 1.01 bil. A provision release of CZK 40 mil. enabled KB to offset worse-than-expected operating performance. Operating profit of CZK 1.98 bil. was significantly behind our and market expectations mostly due to lower revenues (both net interest income and net fees income), which rose only 3.8% y-to-y. Since KB did not account for certain costs on accrued basis within one year in 2001, operating costs strongly grew in Q1 2002 in y-o-y comparison. However, these costs will be now spread more proportionally over the entire year. Surprising was a decline in client deposits by CZK 4 bil., it was partially caused by clients’ switching to more yielding asset-management products of IKS, KB’s 100% owned subsidiary. Retail lending keeps its high dynamics, volume of outstanding mortgages and consumer loans grew by 29% y-o-y and 37% y-o-y, respectively, in Q1 2002. We consider the results to be neutral-to-negative.
CZK mil. Q1 2002 Q1 2001 Change
Net interest income 3,205 3,040 +5.4%
Operating revenues 5,522 5,321 +3.8%
Operating costs 3,542 2,841 +24.7%
Profit before provisions 1,980 2,480 -20.2%
Net profit 1,280 1,312 -2.4%
(Jan Hajek)