KB prezent. angl - Komerční banka

040 ➔041
Report of the Board of Directors
Due from Česká konsolidační agentura
Amounts due from Česká konsolidační agentura decreased by 31.4% to CZK 24.3 billion. Loans in the total amount of
CZK 18.5 billion were granted by Komerční banka to Česká konsolidační agentura, formerly Konsolidační banka Praha, s. p. ú.
for the purpose of re-financing the transfer of the bank’s classified assets in August 1999 and March 2000.
Loans and advances to customers
Net loans and advances to customers (following the deduction of provisions) amounted to CZK 130.9 billion, which represents
an increase by 8.0% compared to the end of 2002. The nominal volume of loans amounted to CZK 140.3 billion, including
CZK 1.8 billion in debt securities acquired under initial offerings and not designated for trading, and the provisions for loan losses
came to CZK 9.4 billion.
Retail loans continued to grow dynamically. Mortgage loans increased year on year by 41.2% to a total of CZK 25.8 billion and
consumer loans by 17.4% to CZK 9.0 billion. The share of retail loans in the total loan portfolio has continued to increase and
stood at 25.2% at the end of 2003.
During 2003 the quality of the bank’s loan portfolio kept improving. At the end of the year standard loans represented 80.1% of
the total loan portfolio, which is an increase by 15.7 percentage points, whilst the share of loans under special review (substandard,
doubtful, loss loans) fell by 11.7 percentage points to 7.4%. This significant improvement was influenced by the
transfer of non-performing loans from the bank’s balance sheet to GE in the first half of the year with a positive impact on the
level of loans under special review, continuous successful workout of non-performing assets within the bank and general
improvement of the quality of the loan portfolio.
The quality improvement of the loan portfolio, together with the release of the general provision led to the further decline of
total provisions and reserves for loan losses by 45.5% to the amount of CZK 9.4 billion including the general provision in the
amount of CZK 4.0 billion. The disposable value of collateral assuring customer loans amounted to CZK 58.6 billion of which
CZK 32.4 billion, i.e. 55.3% was real estate.
A significant part of the portfolio of non-performing loans of Komerční banka was covered until the end of the 2003 by the
State Guarantee. As at 31 December 2003 the final nominal volume of guaranteed assets significantly decreased and
amounted to CZK 1.3 billion, as a consequence of paid instalments, sales, write-offs and the displacement of part of the
assets from the State Guarantee regime (for more details please see the Risk Management section).
Securities available for sale
The portfolio of securities available for sale comprised CZK 22.7 billion of securities, its total volume declined year on year by
7.0%. The bank sold its remaining participation certificates of Otevřený podílový fond Globální (Globální Open Mutual Fund). The
carrying value of asset backed securities (CDO) declined during 2003 by 19.9% to CZK 8.4 billion mainly as a result of the
CZK/USD exchange rate development. The bank also acquired Czech Government bonds in the nominal amount of CZK 4.7 billion.
Investments held to maturity
The volume of the portfolio of investments held to maturity significantly decreased to CZK 97 million. This year-on-year
decrease from CZK 2.5 billion is connected with the full redemption of the subordinated debt issued by the Bank’s subsidiary
Komercni Finance, B. V. made on 15 May 2003. Part of the subordinated bond in the total amount of CZK 2.4 billion was
purchased by the Bank in 2002 and held in this portfolio until redemption.
Investments in subsidiaries and associates
Investments in subsidiaries and associates decreased by 10.3% compared to the year 2002 and amounted to CZK 1.4 billion.
The bank decided to sell its 100% equity participation in Reflexim, 50% shareholding in CAC Leasing and 10% shareholding in
CAC Leasing Slovakia with the result of a decrease in these investments by CZK 116 million. A decrease in the equity of
Komerční pojišťovna led to an additional provisioning of this company by CZK 92 million.