Ceska sporitelna’s consolidated 2000 IAS results, released yesterday, were mixed, and did not spark any response from the stock. The after-tax profit of CZK 41 mil. was worse than expected (Reuters’ consensus CZK 480 mil., our forecast CZK 449 mil.). However, pre-tax profit reached CZK 1.0 bil. (market consensus CZK 420 mil.; Patria’s forecast CZK 470 mil.) as deferred tax payment amounted to CZK 975 mil. (this explained the negative bottom-line surprise). Operating result (before exceptionals) of CZK 5.6 bil. was better than our forecast of CZK 5.0 bil., and we were generally pleased with the operating figures. CS also said it expects to achieve 6% ROE in 2001, which is less than we expect, and maintains its 18% ROE target for 2002.
Behind the strong operating performance were primarily (1) strong net incomes from fees and commissions of CZK 5.12 bil. (20.9% annual growth) and (2) a lower-than-expected depreciation at CZK 2.75 mil. The overall y-to-y decline in operating result by 17.2% (from CZK 6.77 bil. in 1999) was mainly caused by 15.4% drop in net interest income, to CZK 12.0 bil., in 2000.
Exceptional items of CZK 1.4 bil., provisioning of CZK 3.2 bil. (we forecast CZK 2.6 bil.) and an unexpected high tax payment (CZK 1.0 bil.) then resulted in net the relatively low net income figure.
Total assets grew 15.9% (CZK 60.2 bil.) to CZK 438 bil. but adjusting this for the effect of acquisition by CS of Erste Bank’s Czech business would reduce the annual assets growth to 10.2%. Net client loans rose 6.6%, from CZK 104.5 bil. to CZK 111.4 bil. Primary deposits grew in line with expectations by 12.6% to CZK 357.5 bil. (10.5% excl. Erste Bank CR effect).
(Jan Hájek)