Komercni banka’s 9M results, reported yesterday, were worse than the market consensus and our own forecasts. Net profit of CZK 2.53 bil. implies a loss of CZK 183 mil. in Q3 2001. Operating profit of CZK 6.16 bil. lagged behind expectations (CZK 7.00 bil.) as well. As a result, we will revise downward our forecasts for full-year 2001 and 2002, mainly to reflect several one-off cost items. This will have negative implications for our valuation and target price. At the same time, some of the uncertainty surrounding the CDO investment and end-of-year provisioning has been eliminated, which could make the bank’s earnings outlook more transparent and reduce the perceived risk associated with the stock. This positive effect might actually outweigh the effect of the worse-than-expected 9M profits. Moreover, net interest income and net fee income slightly surpassed our forecasts and thus confirmed that KB’s revenue generation is improving.
(Ondřej Daťka)