KB prezent. angl - Komerční banka

In the year ended 31 December 2002, Komerční pojišťovna, a. s. incurred losses specifically in connection with restructuring costs,
industrial insurance claims resulting from the floods that affected the Czech Republic in August 2002, and increased charges for life
insurance technical reserves within the context of the continued decrease in market interest rates in the Czech Republic during 2002.
In the year ended 31 December 2003, Komerční pojišťovna, a. s. incurred additional losses in respect of the restructuring process and
reported a decrease in equity arising from the revaluation of investments in securities.
The decrease in Komerční pojišťovna’s equity during 2003 has triggered the Bank’s decision to charge an additional provision of
CZK 92 million against this investment. As of 31 December 2003, the Bank, in its capacity as the sole shareholder of Komerční
pojišťovna, decided to boost the equity of this entity with the objective of offsetting losses incurred in 2003 and prior years. The share
capital increase amounting to CZK 200 million will be made and recognised in the Bank’s books in the year ending 31 December 2004.
In September 2003, the Bank entered into an agreement to increase the share capital of Franfinance Consumer Credit, s. r. o. from
CZK 120 million to CZK 245 million and became the majority shareholder of the entity owning 51 percent of its issued share capital.
Given that the share capital increase was not registered in the Register of Companies as of 31 December 2003, the Bank does not
report the equity investment in Franfinance Consumer Credit, s. r. o. in its financial statements for the year ended 31 December 2003.
The funding of CZK 125 million provided by the Bank to increase Franfinance’s share capital is reported in other assets within
Prepayments, accrued income and other assets. The share capital increase was registered and the result of the transaction was
recognised in the Bank’s books in February 2004. Franfinance Consumer Credit, s. r. o. acquired 100 percent of the issued share
capital of Essox leasing, a. s. in December 2003. This transaction was settled in 2003.
The main activities of associated companies of the Bank as of 31 December 2003
Company’s name Direct holding Group holding Principal Registered
(%) (%) activity office
Všeobecná stavební spořitelna Komerční banky, a. s. 40.0 40.0 Building society Prague
CBCB – Czech Banking Credit Bureau, a. s. 20.0 20.0 Data collection for credit risk assessments Prague
In June 2003, the Bank disposed of its 50 percent shareholding in CAC LEASING, a. s. and 30 percent shareholding in CAC LEASING
Slovakia, a. s.
2. Events for the year ended 31 December 2003
Dividends declared in respect of the year ended 31 December 2002
At the Bank’s General Meeting held on 19 June 2003, the shareholders approved a dividend for the year ended 31 December 2002 of
CZK 40 per share before tax. The dividend was declared in the aggregate amount of CZK 1,520 million in respect of the total net profit
of CZK 9,229 million under Czech Accounting Standards for that year.
Sale of a portfolio of non-performing loans
The Bank entered into a framework agreement for the sale of a portfolio of non-performing loans with the GE Capital Group (“GE”) on
29 November 2002.
Pursuant to the framework agreement and a subsequent amendment thereto, non-performing loans with an aggregate nominal value
of CZK 15,545 million were assigned for consideration of CZK 2,655 million (including loan exposures and receivables fully written off
in prior years) during the first half of 2003.
The non-performing loans with a nominal value of CZK 15,545 million consist of the following amounts:
– Exposures covered by the State Guarantee CZK 4,217 million
– Other exposures CZK 4,915 million
– Loans written off in prior years CZK 6,413 million.