* Q2 net profit rises 4.5 pct, analysts expected decline
* Reduction in provisioning boosted results
* Still sees slower loan growth, dip in FY profit, revenue
* Shares outperform wider market
(Adds CFO on outlook, details, shares)
By Jan Strouhal
PRAGUE, Aug 1 Komercni Banka, the
Czech Republic's third-biggest bank by assets, posted a surprise
4.5 percent year-on-year rise in second-quarter net profit
thanks to a sharp drop in loan-loss provisions.
The bank's attributable net profit was 3.31 billion crowns
($160.31 million), defying expectations for a profit fall in the
quarter thanks to a decrease in provisions for corporate clients
following the release of "a few large exposures".
The average estimate in a Reuters poll was 3.01 billion.
The better result lifted the bank's shares by 1 percent in
Prague before they gave back gains to trade flat at 0935
GMT. The wider market was down 1 percent.
The bank, 60.4 percent owned by France's Societe Generale
, continued to sound a cautious note on the rest of the
year as it faces record low interest rates and a slower than
expected pick-up in loan growth despite a strengthening recovery
from a record-long recession that ended last year.
Chief Financial Officer Libor Lofler said the loan portfolio
would expand by around 3 percent this year, at the weaker end of
its previous forecast range for 3-5 percent growth.
Revenue is seen falling by 2 percent in 2014 while net
profit should dip around 1.5 percent this year, he said, in line
with a forecast of up to a 2 percent profit decline the bank
made in March.
"We are seeing some signals that demand driven by the
economy recovering is coming," he said. "I expect this year
(loan growth of) roughly 3 percent, maybe 3 percent plus."
Komercni Banka said the volume of loans increased by 3.5
percent in the first half. Net banking income was down 4 percent
year-on-year to 7.59 billion crowns, in line with expectations.
A steep reduction in the cost of risk, reflecting provisions
against losses from loans and investments, boosted
second-quarter results. Provisioning fell to 262 million crowns,
from 494 million a year ago and was about half of what analysts
The Czech central bank left its policy rates on hold near
zero on Thursday and said it would keep the crown weak into
2016, delaying a planned end to foreign exchange interventions
that help keep monetary policy loose amid a lack of inflationary
"The financial environment in the first half of the year was
more difficult than we had expected," Komercni Banka Chief
Executive Officer Albert Le Dirac'h said.
"This was due most of all to a further decline in interest
rates and delayed recovery in corporates' demand for loans."
($1 = 20.6470 Czech Crowns)
(Additional reporting by Jason Hovet; Editing by Jane Merriman
and Mark Potter)