Komern banka, one of the leading banks in the Czech Republic, has released its financial results for the second quarter. The bank reported a slight decline in revenues, which was offset by the release of provisions, resulting in a net profit that exceeded expectations. However, the results were evaluated as neutral due to the volatile nature of the net profit and slightly lower-than-expected net interest income.
The net interest income decreased by 11% to 6,463 million Kč due to lower interest rates on deposits. On the other hand, net fees and commissions showed a modest increase of 4%, mainly driven by customers’ growing investments in mutual funds. However, these fees and commissions were 2% lower than the consensus estimate. Other operating revenues, on the other hand, exceeded expectations by 11%, driven by a strong net profit from financial operations.
Operating expenses increased by 12% to 4,086 million Kč, primarily due to higher personnel costs and temporary higher contributions to deposit insurance following the bankruptcy of Sberbank CZ. Despite this, Komern banka announced a profit of 5,056 million Kč at the operating level, a 16% decrease and 2% below market expectations.
The bank was able to dissolve provisions amounting to 467 million Kč in the second quarter, thanks to lower default rates in corporate and retail segments and successful recovery of several larger corporate exposures. It was expected that the bank would increase provisions by 308 million Kč. As a result, Komern banka reported a net profit of 4,525 million Kč, exceeding expectations by 15% but still 6% lower than the previous quarter.
In terms of customer activity, the volume of deposits decreased by 2.9% to 994.7 billion Kč, while loans increased by 3.3% to 794.6 billion Kč. The bank reported a capital adequacy ratio of 20% and a liquidity coverage ratio of 169% for the second quarter.
Looking ahead, Komern banka has adjusted its outlook for 2023. The bank now expects a low single-digit percentage increase in operating expenses, compared to the previous expectation of a mid-single-digit percentage increase.
On the stock market, shares of Komern banka (BAAKOMB) closed at 714 Kč on the Prague Stock Exchange and at 716 Kč on the RM-SYSTM.
Karel Nedvd, an analyst from Fio banka, a.s., commented on the results.
What factors contributed to Komern banka’s neutral evaluation of its financial performance for the second quarter?
Komern banka, a prominent bank in the Czech Republic, has announced its financial performance for the second quarter. While the bank experienced a slight decrease in revenues, this was mitigated by the release of provisions, leading to a net profit that surpassed expectations. However, experts have evaluated these results as neutral, considering the volatility of the net profit and slightly lower-than-anticipated net interest income.
One of the key factors contributing to the neutral evaluation is the 11% decline in net interest income, which amounted to 6,463 million Kč. This decrease can be attributed to lower interest rates in the market, which impacted the bank’s revenue. Despite this setback, Komern banka remains one of the leading financial institutions in the country.
It seems that Komern banka’s 2Q results were fairly uneventful, with a neutral performance. Hopefully, they can make some positive changes in the coming quarters.