Czech banking sector profit falls 2.7% in H1 2013.

By bne IntelliNews September 2, 2013

The aggregate net profit of the Czech banking sector fell by 2.7% y/y to CZK 36.7bn (EUR 1.4bn) in the first half of 2013, according to central bank data. The decrease came as the country’s four largest domestic banks - CSOB, Ceska Sporitelna, Komercni Banka and UniCredit that account for more than two-thirds of the sector’s profit, saw their H1 earnings fall. The banks blamed the record low interest rates for the fall in earnings.

The banks’ net interest income shrank by 5.6% on the year to CZK 52.1bn in January to June 2013 and the net income from fees and commissions dropped by 2.2% y/y to CZK 18.2bn. Impairments jumped 30.6% y/y to CZK 8.1bn.

The sector’s capital adequacy improved to 17.14% as of end-June 2013 from 16.32% a year ago.

There were 45 banks operating on the Czech market at end-June 2013. Of them, 37 are foreign-owned.

IntelliNews comment: Czech banks have seen their profits fall as the central bank cut its benchmark rate to almost zero in November 2012 in an attempt to boost consumer spending and help the economy that has just emerged from a record-long recession that lasted six quarters. The low interest rates coupled with intense competition between banks for borrowers and depositors squeezed interest rate margins. The sector’s profitability may further weaken next year as the main centre-left party Social Democrats (CSSD), likely to win Oct early elections, has pledged to raise taxes for utilities and banks once it comes to power to bolster state revenue.

Banking sector performance in H1 2013      
CZK bn H1 2013 H1 2012 y/y change
Net profit 36.7 37.7 -2.7
Net interest income 52.1 55.2 -5.6
Net fees & commissions 18.2 18.6 -2.2
Administration costs 32 33 -3.0
Provisions 0.5 0.07 614.3
Impairment 8.1 6.2 30.6
Capital adequacy ratio in % 17.14 16.32 0.8
Source: Czech central bank      

Related Articles

Strongly profitable Czech petrochemical maker Unipetrol puts cracker explosion behind it

Unipetrol looks to have finally got over the August 2015 fire and explosion that wrecked its steam cracker, an indispensable installation in the production of ethylene feedstock needed to manufacture ... more

Evolution Equity Partners closes $125mn cybersecurity-focused fund

Evolution Equity Partners announced on 17 July the final closing of a new fund with total capital commitments of $125mn to make investments in cybersecurity and next generation enterprise software ... more

Czech-based CME divests Croatian Nova TV and Slovenian Pop TV for €230mn

Czech Republic-based broadcaster Central European Media Enterprises (CME) on July 10 announced the divestiture of its leading Croatian and Slovenian TV stations to United Group's Slovenia Broadband ... more

Dismiss