KB’s net profit of CZK 1,44 bil. (+12.3% y-o-y) stood 15% below our estimate (and market consensus) solely due to higher-than-expected provisions and income tax. We have had expected KB to release CZK 86 mil. of provisions, in fact, it created CZK 339 mil. of provisions in Q1 2003. Effective income-tax rate rose to 34%.
Operating profit of CZK 2.50 bil. stood 2% above market consensus. Operating revenues almost meet our forecast, less significant decline in net interest income offset weaker fees income (4% below estimate). We have been positively surprised by 16% y-o-y decline in operating costs. Restructuring charges of CZK 264 mil. somewhat offset the positive cost development (we assumed only CZK 90 mil. of restructuring costs).
Overall, the results are neutral.