Ceska sporitelna’s 9M IAS consolidated figures, released Monday morning, met consensus expectations. Net profit stood at CZK 1.18 bil. (vs. market consensus of CZK 1.20 bil. and Patria’s forecast of CZK 1.21 bil.), profit before provisions (CZK 3.55 bil.) was only 2.3% below expectation. Provisioning was in line with the bank’s past policy (2.2% of average client loans). Total bank assets (CZK 474 bil.) were only slightly behind our estimate (CZK 477 bil.). CEO J. Stack has reiterated CS’s 2002 targets following the release of the 9M results: 18% ROE (CS is reportedly confident of reaching the goal) and a cost/income ratio below 70% (he expects CS to achieve 60–65%, in fact). Stack has also mentioned CS’s general target of an above 20% ROE after 2002, which we consider rather ambitious.
The results confirmed the reliable predictability of CS’s full-year 2001 performance (CS expects 2001 ROE of 6.5–7.0%, and a net profit of CZK 1.5–1.6 bil.) and, therefore, the relatively low risks associated with the bank, which nowadays seems to be a desirable quality.
Also, the bank suggested that, sooner or later, it will pay dividends; a decision will be made in Q1 2002.
Erste bank’s Prague branch was folded into Ceska sporitelna as of September 30, 2000; therefore, y-to-y changes in the P&L account are still biased.
(Jan Hajek)