RPT-Czech Komercni 2006 profit in line, but shares fall

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By Marek Petrus

Komercni Banka , the biggest listed Czech lender, posted a 2.3 percent gain in 2006 net profit on Wednesday, as provisioning charges against its expanding retail market lending ate into rising revenues.

Audited group net profit came in at 9.12 billion crowns ($424 million), compared with an average forecast of 9.17 billion crowns in a Reuters poll of eight analysts.

Excluding last year's full takeover of a building savings subsidiary Modra Pyramida, consolidated into the group's results from the fourth quarter, put the bank's pro forma net profit at 9.09 billion crowns.

Komercni, 60 percent owned by France's Societe Generale , plans to pay 150 crowns per share on the 2006 net profit of 9.12 billion crowns ($424 million), after paying a record dividend of 250 crowns a share on the 2005 earnings.

Komercni shares fell 1.4 percent to 3,500 crowns by 1435 GMT, off a record high of 3,675 crowns on Monday. The Prague bourse's blue-chip index PX dropped 0.3 percent.

Some analysts said the dividend news hurt the stock.

"In our view, there was some room for a certain surprise in the form of a higher dividend, and in this respect, the proposed level could mark a disappointment for some in the market," said Marek Hatlapatka, analyst at Cyrrus broking house in Prague.

The stock trades at some 15 times forecast 2007 earnings, according to Reuters Estimates. This gives a 19.7 percent discount to the central European banking sector average of nearly 17 times, according to analysts at KBC Securities.

RAPID LOAN GROWTH

Chief Financial Officer Pavel Cejka said Komercni could raise dividend payments in future if its Tier 1 or core capital exceeds 10 percent of risk-weighted assets. It stood at 10.6 percent at the end of last year.

"We are targeting a Tier 1 capital ratio of about 10 percent. If we are significantly above that level, the excess could be distributed to shareholders through dividends," Cejka told a news conference.

"At the moment, we are not planning an interim dividend," he told Reuters after the presentation.

Komercni has benefited from growth in the European Union country's economy, reporting 15 percent growth in business loans and a 27 percent rise in credit extended to consumers.

Net interest income, a figure closely watched by analysts as a gauge of underlying performance, was up 10.3 percent year-on-year to 16.16 billion crowns, almost matching the average market consensus forecast of 16.20 billion.

Overall group revenues rose 7.3 percent year-on-year to 26.30 billion crowns, a touch above the 26.24 billion forecast.

The bank's loan-loss provisions nearly doubled, reflecting last year's reversals on corporate credit exposure and a fast growth in mass retail market lending this year. ((Editing by Leslie Gevirtz; Reuters Messaging: rm://marek.petrus.reuters.com@reuters.net; e-mail: prague.newsroom@reuters.com or marek.petrus@reuters.com; +420 224 190 477)) ($1=21.51 Czech Crown)

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Keywords: KOMERCNI RESULTS/

[PRAGUE/Reuters/Finance.cz]