Komercni Banka's Q3 profit beats estimates, interest income continues drop

Komercni Banka as

03/11/2023 07:02

PRAGUE, Nov 3 (Reuters) - Czech lender Komercni Banka
 BKOM.PR  on Friday reported lower third-quarter net profit that
beat market expectations, hit by higher operating costs and a
continued fall in net interest income. 
    The country's third-biggest bank, which is majority owned by
French financial group Societe Generale  SOGN.PA , posted an
8.5% drop in attributable net profit to 4.27 billion crowns
($185.66 million) for the quarter ended Sept. 30.
    But the profit beat an analysts' average estimate of 4.08
billion crowns in a Reuters poll due to an unexpected release of
loan loss provisions.
    Net interest income fell 11% to 6.51 billion crowns, while
net banking income was down 9.5% to 8.90 billion crowns.
    With high inflation and interest rates at more than
two-decade highs in the past year, banks had seen rising profits
initially but are now facing higher financing costs from clients
shifting to better-yielding deposits to safeguard savings.
    Komercni Banka forecast its 2023 revenues should decline at
a mid-single-digit rate due to interest income falling by a
tenth and a central bank decision to end remuneration of
mandatory minimum reserves. 
    The bank has estimated the latter would have a negative
impact of about 115 million crowns a month.
    Loan demand has also been tepid amid a high-rate
environment, and Komercni Banka said it expected its group
lending to grow at a low- to mid-single-digit rate in all of
2023.
    On Thursday, the Czech National Bank deferred the start of
interest rate cuts on Thursday, leaving the option of launching
an easing cycle open in December.
     
($1 = 22.9990 Czech crowns)

 (Reporting by Jason Hovet; Editing by Rashmi Aich)
 ((jason.hovet@thomsonreuters.com;))