Komercni Banka's Q3 net profit jumps 34%, loan provisioning on the rise

PRAGUE, Nov 4 (Reuters) - Komercni Bank BKOM.PR, the Czech Republic's third-biggest bank, posted a 34% rise in quarterly profit to 4.61 billion crowns ($184 million) on Friday helped by elevated interest rates.

The third-quarter was in line with the 4.56 billion expected by analysts in a Reuters poll despite higher-than-expected provisioning for bad loans.

Net interest income rose 36% to 7.34 billion crowns.

With rising profits in a high-interest rate environment, Czech banks are in the government's sights as it battles the European energy crisis.

The centre-right cabinet is finalising a windfall tax on excessive profits of the biggest lenders from 2023 to help pay for measures to aid households and companies hit by soaring electricity prices in the wake of Russia's invasion of Ukraine.

The bank, majority owned by France's Societe Generale SOGN.PA, said it expected 2022 revenue growth of more than 20% driven by net interest income.

Loan growth should grow in the upper mid-single digits despite slowing mortgage sales, it said.

The Czech National Bank's policy interest rates are the highest since 1999 as the bank has carried out sharp tightening since June 2021 to battle inflation.

High inflation, which hit a headline rate of 18% in September, is hitting Czech households, tipping the economy into a recession and cutting consumer confidence to all-time lows. Banks are bracing for an increase in bad loans.

Komercni Banka said on Friday its cost of risk, reflecting provisioning, rose to 669 million crowns from 425 million in the quarter, the highest since 2020 when the coronavirus pandemic was at its worst.

However, it forecast risk costs to stay below normalised levels in its 2022 outlook.

($1 = 24.9990 Czech crowns)

(Reporting by Jason Hovet; editing by Jason Neely)


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