Komercni Profit Drops as One-Time Gains Aren’t RepeatedLenka Ponikelska
Komercni Banka AS, the Czech unit of Societe Generale SA, said first-quarter profit fell as income from fees and financial operations shrank while one-time gains on adjustment of its pension funds portfolio weren’t repeated.
Net income dropped to 3.15 billion koruna ($160 million) from 3.49 billion koruna a year earlier, the Prague-based lender said in a regulatory statement today. Net interest income fell to 5.26 billion koruna from 5.55 billion koruna a year earlier, net income from fees and commissions declined 4 percent to 1.73 billion koruna, while gains from financial operations slumped 41 percent, Komercni said.
While the environment will “remain quite challenging through the next several quarters, the upcoming easing of fiscal consolidation makes me optimistic that the economy will start to pick up gradually in the near future,” Chief Executive Officer Henri Bonnet said in the statement. “The foundations of the Czech economy are healthy and that includes the banking system,” Bonnet said.
The Czech central bank kept interest rates near zero for a fourth meeting last week as policy makers debate whether to weaken the koruna amid the recession. The economy has shrunk for five consecutive quarters, the longest contraction since at least 1996, as households and businesses spend less because of Europe’s debt crisis and government austerity.
The Czech banking industry saw “gradually moderating” growth in lending to individuals in the first quarter as unemployment increased, the lender said. There were “tentative” signs of improving demand for loans by companies, mainly utilities and large enterprises, Komercni said.
Total gross loans rose 4.8 percent to 472.3 billion koruna from a year earlier. Mortgage portfolio expanded 7.3 percent to 134.4 billion koruna and corporate lending increased 6.1 percent to 258.5 billion koruna, Komercni said.