February 8, 2018 / 7:13 AM / a year ago

UPDATE 1-Komercni Banka proposes higher than expected dividend, Q4 beats estimate

(Adds details of results)

PRAGUE, Feb 8 (Reuters) - Czech lender Komercni Banka posted a 22 percent rise in fourth-quarter net profit, beating estimates, and proposed a higher-than-expected dividend from full-year earnings.

The bank, the third largest in the Czech Republic and majority owned by France’s Societe Generale, said on Thursday its attributable net profit rose to 3.71 billion crowns ($180.52 million) in the quarter, helped by the release of provisions for bad loans.

It said its board proposed paying out 47 crowns per share in dividend, higher than its pledge last year to distribute 60 percent of full-year recurring net profit, which reached 14 billion crowns in 2017. Analysts had expected a dividend of 42.5 crowns, according to the median forecast in a Reuters poll.

The bank said it intended to pay out 65 percent of its 2018 recurring net profit, a higher portion than for 2017 but still below payouts of recent years as banks face higher capital requirements imposed by the central bank to get ahead of a lending boom.

With a growing economy and unemployment the lowest in two decades, banks have seen strong lending growth in recent years. The central bank started raising interest rates last August, delivering three rate hikes so far.

However, Komercni Banka lagged the lending market last year, with its gross loans rising by 1.8 percent, as more companies seek funding in euros rather than crowns following the central bank’s currency cap regime that ran from 2013 to 2017. The bank has been cautious of this trend.

Net banking income rose 2.1 percent in the fourth quarter to 7.93 billion crowns, helped by a 5 percent rise in net interest income.

Profit in the quarter was also helped by the release of loan provisions. The bank, though, said its current low level in cost of risk, reflecting provisioning against losses from loans and investments, was not sustainable. ($1 = 20.5520 Czech crowns) (Reporting by Jason Hovet Editing by Muralikumar Anantharaman)

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