In the first nine months of 2019, the bank recorded an increase in net banking income of 9.5% YoY and an increase in net profit of 8.8%.
P&L
As Komercijalna Banka published their 9M 2019 results, we are bringing you key takes from the report. According to it, the company recorded a decrease of 1.1% in net interest income which amounted to RSD 9.46bn. Such a result is 3.6% lower than the planned one. Within interest income, the largest share was generated by interest income from retail operations (RSD 5.19bn or 50.7%). In interest expenses interest applied to retail deposits also dominate (RSD 531.2m or 68.5%), which is largely a result of interest expense on foreign currency savings. As of 9M, the banks NIM (on total assets) stood at 3.1%, showing pressure (NIM stood at 3.4% at the end of 2018).
Net fee and commission income amounted to RSD 4.02bn, which represent a solid increase of 4% YoY. Such a result came from on the back of fee and commission expenses being reduced by RSD 154.2m or 10.8%. Such a result is 8.7% lower that the planned one.
In the P&L, the company recorded the biggest deviation from plan in the item impairment of financial assets not valued at fair value in the amount of RSD 2.3bn (compared RSD 167.75m in the same period in 2018). As a result of that, net banking income amounted to RSD 15.85bn, representing a solid increase of 9.5% YoY.
Going further down the P&L, operating expenses amounted to RSD 9.20bn, representing a decrease of 12% YoY. Of that, other expenses observed the highest increase of RSD 702.9m or 15.7% YoY. Therefore, CIR as of Q3 stood at 57.8% showing a slight decrease of 0.2 p.p since the beginning of the year.
In the first nine months of 2019, net profit amounted to RSD 7.08bn, showing an 8.8% increase YoY and a 41.8% increase compared to the plan.
Balance Sheet
Turning our attention to the balance sheet, at the end of Q3 2019, the Bank’s balance sheet assets amounted to RSD 419.9bn and increased by RSD 18.7bn or 4.7% compared to the end of 2018. Of the total assets, loans and receivables to customers account for 42.1% and have since the beginning of the year observed a solid increase of 5.6%. Such an increase could be attributed to the rise in both retail and corporate loans. The bank is still geared towards retail loans which account for 55.3% of the total loans to customers and which have observed a solid growth of 6% YoY.
On the liabilities side, the Bank recorded an increase in deposits (excluding other liabilities and credit lines) in the amount of RSD 8.1bn or 2.2%. Within the structure of the mentioned change, retail deposits increased by RSD 14.06bn, while corporate deposits decreased by RSD 5.9bn. These changes also include the effect of appreciation of the dinar against the euro (0.6%) and depreciation against the Swiss franc (3.1%) and the US dollar (3.8%), from the beginning of the year to the end of Q3 of 2019.
Such a result puts the L/D ratio at 55.4%, showing an increase of 1.6 p.p. since the beginning of the year.
When observing the company’s capital adequacy ratio, one can notice that Komercijalna Banka currently operates with a CAR of 30.86%, indicating that the bank is well capitalized, as the regulatory minimum stands at 8%.
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