Komercni Banka Quarterly Net Declines on Greek Bond Charge
Komercni Banka AS (KOMB), the Czech unit of Societe Generale SA, said its profit fell in the fourth quarter as the lender took additional charges on Greek bonds.
Net income at the Czech Republic’s third-largest bank dropped to 2.43 billion koruna ($125 million) from 3.37 billion koruna a year earlier, it said today on its website. That was below the 3.09 billion-koruna median estimate by 10 analysts surveyed by Bloomberg. The shares lost as much as 4 percent.
Prague-based Komercni wrote off 5.36 billion koruna from a 7 billion-koruna portfolio of Greek government bonds last year, of which it took the 1.06 billion-koruna charge in the final quarter, it said. The notes’ residual value is 25 percent of face value and is limited to 2.07 billion koruna.
The bank’s “intrinsic” profitability “moderately” increased and results remained “solid,” even with the Greek bond write-off, Chief Executive Officer Henri Bonnet said in a separate statement. There are “clear” signs the lender’s strategy reviewed in 2010 is on the “right” course.
The board will propose a dividend of 160 koruna per share from 2011 earnings after paying a record dividend of 270 koruna a year earlier.
‘Disappointment’ in Dividend
That proposal is a “disappointment” when compared with a 77 percent dividend payout ratio last year and the lender’s high capital adequacy, J&T Banka AS analyst Milan Lavicka wrote in a note to clients today.
“We expected a dividend to be around 200 koruna,” Lavicka wrote.
The shares fell 147 koruna to 3,530 as of 11:34 a.m. in Prague trading.
Czech and Slovak banks are less at risk from a funding crunch than other lenders in the European Union’s east because they are the only regional institutions whose total deposits exceed outstanding loans. Savings in Czech banks covered 137 percent of loans at the end of 2010.
The dividend payout ratio of 60 percent to 70 percent is “adequate” giving the current economic environment and the capital adequacy of the lender, Chief Financial Officer Pavel Cejka said at the press conference in Prague today.
Komercni Banka AS doesn’t expect any write-downs on Italian state bonds and its exposure to Portugal sovereign bonds is “insignificant,” Cejka said.
Loan Portfolio
The bank’s loan portfolio will grow 3 percent to 5 percent in 2012, Cejka said. The top end of the forecast is “optimistic”, the executive added.
Komercni earnings last week’s report by rival Ceskoslovenska Obchodni Banka AS, the Czech unit of KBC Groep NV, which reported a 30 percent slide in net income in the last quarter of 2011 after taking charges on Greek bonds.
Societe Generale (GLE) SA, France’s second-largest bank, said today its fourth-quarter profit declined 89 percent as the investment bank posted its first loss in two years.
Net income dropped to 100 million euros ($130 million) from 874 million euros a year earlier, the Paris-based bank said in a statement today.
To contact the reporter on this story: Lenka Ponikelska in Prague at lponikelska1@bloomberg.net
To contact the editor responsible for this story: Douglas Lytle at dlytle@bloomberg.net
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