The following is a summary of the Komercní Banka, A.s. (KMERF) Q1 2024 Earnings Call Transcript:

Financial Performance:

• Komercní Banka reported a net income of CZK2.8 billion in Q1 2024, a decrease by 21.3% primarily due to provisions.

• The bank's ROE was near 9%, asserting it would be in double digits with IFRIC 21 linearization.

• Core Tier 1 and total capital remained high at 17.7% and 18.8% respectively; cost-to-income ratio was 54.5%, potentially dropping below 50% with IFRIC 21 linearization.

• Komercní Banka announced a decision to distribute the entire 2023 net profit of CZK82.66 per share to shareholders.

• The bank saw growth in loans by 4.6%, deposits by 7.2%, and other assets under management by 15.3% year-over-year.

• Due to an increase in cost of risk, the bank reported a reduced Q1 2024 net profit after tax, down by CZK760 million from last year, but anticipates revenue growth in low-to-mid single digits compared to 2023.

• It was disclosed the potential sale of their head office building could positively impact profit and loss.

Business Progress:

• Komercní Banka has seen significant growth in its digital platform, reaching 350,000 users in Q1 2024 and targeting 1 million users by the end of the year.

• The bank reported an increase of 22,000 clients, mixing successfully migrated and newly on-boarded customers through the new digital bank.

• Investments into infrastructure, including the introduction of the Temenos 24 core banking system and the creation of a new mortgage center, are aimed at improving efficiency and aiding client acquisition and retention.

• Recognition from Visa and Mastercard have further cemented the bank's reputation as an innovative and responsible financial institution.

• Aiming for a 7% growth from retail (mortgage and consumer loans) and expectations to match market growth for corporate loans, Komercni Banka is projecting an increased share in these markets, and deadlines have been set for the release of Stage 2 overlays for retail and corporate loans.

• Lastly, the bank forecasts 2024 GDP growth of about 1.4%, which is an upward revision from the previous estimate of 0.8%.

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