CS released 9M IAS consolidated results on Thursday (see below). An after-tax profit of CZK 311 mil. stood slightly below market expectations (CZK 390 mil.). Reported profit before provisions was significantly above the market consensus (Reuters), but this was primarily due to some one-off items (both costs and revenues) being reclassified for the first time as “Other Operating Result,” which appeared separately from the “Operating Profit” in the 9M figures. Given the confusion that resulted from these changes, CS is planning to release an additional set of 9M figures that would correspond to the old format. Comparable figures for 1-9/1999 were not available.
(CZK bil.) 9M 2000
Net interest income 8.810
Income from fees & comm. 3.168
Other income 1.892
Total revenues 13.870
Profit before provisions 3.879
Other operating result (exceptionals) -1.501
Provisions -2.225
Pretax profit 0.153
After-tax profit 0.311
On the revenue side, the trends from H1 extended into Q3 in case of net interest income (lower net interest margin of 2.73% was offset by higher deposit base) and fees and commissions income. On the cost side, worth mentioning are the main one-off items: apart from the CZK 1.7 bil. restructuring charge booked in H1, there was a new CZK 1.0 bil. provision for fixed-assets revaluation. On the other hand revaluation of investment funds (after the funds opened and were reclassified) resulted in a one-off gain of CZK 1.3 bil. The amount of provisions for credit risk created at the end of September (CZK 2.2 bil.) was significantly higher than at the end of June (CZK 0.9 bil.), which CS attributed primarily to stricter credit classification and credit rating procedures employed by the bank (the amount of classified loans grew slightly in absolute terms but declined as a % of total loan portfolio). CS expects lower provisioning in Q4 alone than in Q3. There were no extraordinary changes in the balance sheet (total assets of CZK 439 bil.), except that these assets now include CZK 21.5 bil. of assets of Erste Czech Republic. Erste CR added CZK 13 bil. to net customer loans and CZK 7 bil. to customer deposits. Patria’s opinion on CS is restricted.
(Ondřej Daťka)