August 2, 2018 / 5:59 AM / 20 days ago

Komercni Banka posts higher Q2 profit, keeps dividend target

PRAGUE, Aug 2 (Reuters) - Komercni Banka confirmed on Thursday a target to pay out 65 percent of its 2018 profit in dividends, after the Czech lender reported a higher-than-expected second-quarter net profit, helped by the release of bad loan provisions.

Attributable net profit at the bank, the country’s third-largest and majority owned by Societe Generale of France, rose 3.8 percent to 3.76 billion crowns ($171.26 million), above the average estimate of 3.41 billion crowns in a Reuters poll.

Net banking income was steady at 7.83 billion crowns, above expectations for a dip, as it was buoyed by a rise in net interest income.

The bank said its loan book had grown by 4.2 percent so far in 2018 and that it expected full-year growth to remain in the mid- to low- single digits. Growth this year would be better than a 2 percent increase in 2017, it said.

Czech banks are benefiting from rising interest rates since the central bank began tightening policy a year ago, but at the same time face higher competition and tougher restrictions on mortgage lending as policymakers seek to reign in credit growth amid a hot property market.

Komercni Banka said it expected some front-loading of mortgage sales before new requirements on borrowers’ income levels take effect in October.

At the same time, it said business lending may be subdued due to increasing corporate bond issuance and still-abundant cash piles that firms hold.

Deposits are likely to grow faster than loans, Komercni Banka said. ($1 = 21.9550 Czech crowns) (Reporting by Jason Hovet; Editing by Subhranshu Sahu)

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