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UPDATE 2-Komercni Banka increases dividend, shares hit record high
February 12, 2015 / 8:07 AM / 3 years ago

UPDATE 2-Komercni Banka increases dividend, shares hit record high

(Adds outlook on lending, shares, CFO comment)

By Jason Hovet

PRAGUE, Feb 12 (Reuters) - Komercni Banka shares jumped to a record high on Thursday after the Czech lender raised its dividend to 91 percent of 2014 net profit and promised to maintain increased payouts in the coming years.

The bank, 60 percent owned by France’s Societe Generale , proposed a 310 crown ($13) per share dividend and paying 80-100 percent of profit in 2015 and 2016, up from its previous policy of 60-70 percent.

The bank had reviewed its dividend policy after surpassing its capital ratio needs, and as Czech banks’ profitability weathers record low interest rates with more lending.

But the proposed dividend for 2014 was higher than all estimates in a Reuters poll of analysts, boosting shares by almost 4 percent to hit an all-time high of 5,350 crowns.

The country’s third largest bank paid 230 crowns per share from 2013 profit.

Backed by increased lending, Komercni Banka posted higher-than-expected fourth-quarter net profit of 3.33 billion crowns ($136.48 million), beating an average estimate of 3.03 billion in a Reuters poll due to a faster drop in bad loan provisioning.

Full-year attributable net profit, from which it pays dividends, rose 3.6 percent to 12.99 billion crowns in 2014.

Czech banks have helped buoy profits at their Western parent groups after coming out of the global financial crisis relatively unscathed, with high capital adequacy and low loan-to-deposit ratios.

Lending has picked up with the Czech economy now firmly recovered from a record-long recession that ended in 2013, but not before the central bank cut interest rates to near zero. The central bank sees economic growth rising to 2.6 percent in 2015, from an estimated 2.3 percent last year.

Komercni Banka’s loan book expanded 4.5 percent in 2014 and it predicted an acceleration of growth to 5 to 6 percent in 2015, pushed by a revival of consumer loans and stronger corporate demand thanks to investments and acquisition activity.

“This is our starting assumption: a good economy but low interest rate environment,” Chief Financial Officer Libor Lofler said. “For that we assume, when looking at the loan portfolio, we shall see lending to grow by 5 to 6 percent.”

Net banking income should be flat in 2015, he added, as low interest rates leave little room for growth on net interest income. In the fourth quarter, it rose 2.6 percent to 7.81 billion crowns, beating expectations. ($1 = 24.4010 Czech crowns) (Editing by Jason Neely and Crispian Balmer)

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