Komercni banka's audited unconsolidated full-year 2002 results, released yesterday, were in line with the bank’s unaudited figures released one month ago (net profit of CZK 8.8 bil., operating profit of CZK 9.8 bil., and an EPS of CZK 234). The consolidated 2002 results, below, were in line with our estimates.
IAS, cons. (CZK mil.) 2002 2001 Change
Operating revenues 25,920 26,433 -1.9%
Operating profit 9,929 8,817 +12.6%
Provisioning 1,758 -4,927 -
Pre-tax profit 11,687 3,890 +200.4%
Net profit 9,026 2,904 +210.8%
KB's management yesterday announced that the bank’s dividend for 2002 should be higher than the dividend for 2001 (CZK 11.50). KB CFO P. Rucheton said, however, that he considers some of the 2002 results as unsustainable, and he cited the present uncertainty regarding the development of the global economy. The 2002 dividend will be thus based on a "sustainable" 2002 profit and "standard" payout ratios currently seen among central and east European retail banks.
Based on this, we consider our previous 2002 dividend forecast of CZK 57 per share as indicative of an upper limit. Estimating KB's sustainable 2002 profit at CZK 6.5 bil. and taking into account a standard payout ratio of 20-25% thus implies a gross dividend of CZK 34-43 per share.
Interestingly, Mr. Rucheton told Reuters that "the KB share price of over CZK 2,000 is very high and that the basic strategy of the bank is not to try to boost the share price by high dividends."
As concerns KB’s 2003 outlook, A. Juan, the CEO, said that the bank would see stagnant net interest income (declining interest margins will offset lending growth), subject to domestic macroeconomic conditions this year. Moreover, he expects improvement in KB's fees income this year (even double-digit growth), to be driven by the recent increase in fees for basic operations and the higher sales of major subsidiaries' products.
While Mr. Juan’s comment on the outlook for interest income is slightly bearish relative to our forecast, the expectation for fees income growth is largely in line with our estimate (8% growth).
Overall, we do not see the comments as really encouraging.
Jan Hájek