KB prezent. angl - Komerční banka

038 ➔039
Report of the Board of Directors
Comments on the IFRS Unconsolidated Financial Results
Profit and Loss Statement
Komerční banka, according to IFRS, reported an unconsolidated net profit of CZK 9,262 million for 2003 representing a year-on-year
increase by 5.7%. This favourable result was achieved by the successful business performance of the Bank, especially in retail
banking, efficient cost control and the release of provisions. Significant trends affecting the year-end results are described
below:
Net interest income
Net interest income amounted to CZK 11,937 million. The positive effect of the growth in core business loans and deposits
was more than offset by continuously declining interest rates (the CNB repo rate fell from 2.75% to 2.00% during 2003) and
thus the net interest income declined slightly by 4.1% compared to 2002. In 2003, the share of interest income from Česká
konsolidační agentura in the total interest income further decreased when its volume fell year on year by 41.0%. On the other
hand interest income from clients, rising by 48.1%, significantly increased its share in the total interest income. The net
interest margin in 2003 amounted to 3.0%.
Net fees and commissions
The Bank generated Net fees and commissions of CZK 8,711 million, which represents a year-on-year increase by 4.7%. This
trend was driven by an 8.9% increase in non-foreign exchange fees and commissions. Due to an increase in volume of
granted loans and in the number of the Bank’s clients, fees for loan administration, account maintenance and from
settlements were the fastest growing. At the same time and in line with market developments FX fees and commissions
declined influenced mainly by the increasing use of the Euro.
Net profit from financial operations
Net profit from financial operations amounted to CZK 800 million. This result comprises profits from FX operations (CZK 623 million),
from securities (CZK 115 million) and interest and commodity derivatives (CZK 62 million).
Other income
Other income totalled CZK 441 million, increasing by 9.2% compared to 2002. It includes dividends from subsidiaries and
associates (CZK 253 million) which grew year on year by 38.3%, mainly due to dividends received from CAC Leasing,
a former associated company. Komerční banka sold the 50% ownership interest in this company at the end of June 2003.
Total operating income
Total operating income came to CZK 21,889 million and reflected the positive development in core business activities of the
Bank. The share of non-interest income in the total operating income grew to 45.5%.
Total operating costs
Total operating costs totalled CZK 11,728 million, which is a decrease by 8.1% or more than CZK 1 billion compared to 2002.
This positive result confirms an increasing efficiency of the Bank.
Personnel expenses of CZK 5,149 million, representing a decrease by 2.1%, were influenced by continuous staff reductions
in conjunction with the centralisation of processes.
Other administrative expenses stood at CZK 4,562 million, representing a year-on-year decrease by 5.8%. This reduction can
be attributed to the finalisation of the Bank’s transformation programme and increasing productivity of the Bank.
Restructuring costs of CZK 670 million related mainly to the Bank’s rebranding, rents termination and consultancy services.
Depreciation and other provisions amounted to CZK 1,347 million, which represents a year-on-year decrease by 18.5%.