Komercni Banka AS (KOMB), the Czech unit of Societe Generale SA (GLE), said first-quarter net profit rose 3.3 percent boosted by higher interest income, gains from financial operations and increasing volume of loans and deposits.
Net income for the three months ending March 31 was 3.49 billion koruna ($184 million) from 3.38 billion koruna a year earlier, the Prague-based lender said today in a statement. Net interest income, the lender’s largest source of revenue, rose 3.2 percent to 5.54 billion koruna.
The results show the lender’s “capacity” to develop lending despite signs of economic slowdown that curbed corporate demand for new loans, Chief Executive Officer Henri Bonnet said in a separate statement today. Komercni doesn’t expect a “swift” recovery and the lender is “well prepared” for a “stagnant” economy, he said.
Komercni dropped 45 koruna, or 1.3 percent, to 3,400 koruna as of 10:27 a.m. in Prague.
“The results were better than expected thanks to items that may not be sustainable in a long term like general administrative expenses,” Marek Hatlapatka, an analyst at Cyrrus AS brokerage in Brno, wrote in a note today. Loan portfolio volume “stagnated” quarter on quarter and with the “slight” decline of net interest margin there aren’t big chances for a significant improvement during the year. Hatlapatka recommends investors to “buy” the stock.
In the quarter-on-quarter comparison, there’s a “slight” decline in corporate and consumer lending, Chief Financial Officer Pavel Cejka told a news conference in Prague. “Apart from mortgage growth, it’s obvious that there’s an impact of the economic slowdown that started last year.”
The lender has seen the same pace of growth in mortgages in the current quarter as in the previous one, Cejka added.
The Czech central bank will probably leave its two-week repurchase rate at a record-low 0.75 percent today, a quarter point below the European Central Bank’s main rate, according to all 20 economists in a Bloomberg survey. Czech policy makers have kept borrowing costs unchanged as the economy slid into a recession in the second half of 2011 and a sales-tax increase at the start of this year spurred inflation to the fastest in more than three years.
Loans, Deposits Rise
Total gross volume of loans provided by Komercni increased 13 percent in the first quarter from a year ago to 450.5 billion koruna, the lender said.
Komercni’s mortgage portfolio rose 13 percent to 126.5 billion koruna from a year ago, it said.
The bank has seen “harsh” competition on mortgage financing at the start of the year, Bonnet told reporters. However, the product still remains “profitable” and the cost of risks is “reasonable” for the time being, he said.
The total volume of deposits advanced in the first quarter to 5.3 percent from a year ago to 564.8 billion koruna, it said.
Komercni holds 7.7 billion koruna of Italian bonds, according to a presentation on its website today.
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