November 6, 2019 / 11:18 AM / 15 days ago

UPDATE 1-Komercni Banka aims to outpace Czech lending growth next year

(Adds dividend, lending outlook, CFO comments)

PRAGUE, Nov 6 (Reuters) - Komercni Banka said on Wednesday it aims to boost lending growth next year by more than the wider market for the first time since 2016 after reporting a fall in third-quarter profit.

The country’s third largest bank by assets reported an 8.5% drop in third-quarter attributable net profit to 3.85 billion crowns ($167.25 million), in line with expectations in a Reuters poll.

The drop was expected as the bank’s income from financial operations fell after a jump in 2018 when the Czech central bank was in the middle of a series of interest rate hikes.

Czech banks’ lending growth overall has been in the mid-single digits on the back of a strong economy and a buoyant housing market, which the central bank has tried to cool with stricter lending requirements. But Komercni Banka has lagged the market due to tough competition.

CFO Jiri Sperl said Komercni Banka’s lending growth would stagnate around 4% this year, a percentage point below the overall market. But he said the market was expected to pick up to an estimated 6% growth in 2020 and the bank wanted to grow above that.

“We would like to at least partially get back what we lost this year, that is mainly in the retail banking portfolio,” he said.

Czech banks, which are strongly-capitalised and have avoided troubles in the decade since the global financial crisis, have been key profit drivers for their western European owners.

In the third quarter, Komercni Banka, which is about 60% owned by French bank Societe Generale, had a slow down in the net release of bad loan provisions unlike in previous quarters.

But the bank said it could get a significant one-off boost up to end of the year as it was in the process of resolving a large corporate default, which Sperl estimated at around 500 million crowns.

The strong Czech economy has allowed banks to release loan provisions in recent years, cutting risk costs sharply.

Rival MONETA Money Bank raised its profit guidance for 2019 on Wednesday, partly on the back of lower-than-expected cost of risk.

Komercni Banka also confirmed its plans to pay a dividend of 65% from 2019 consolidated attributable net profit.

J&T Banka analyst Milan Lavicka estimated a 2019 dividend payout could give a yield above 6.5%.

Komercni Banka shares were down 0.5% at 787 crowns at 1112 GMT, giving up earlier gains.

$1 = 23.0190 Czech crowns Reporting by Jason Hovet and Robert Muller; editing by David Evans and Jane Merriman

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