* Komercni likely to release some provisions in 2010 - CEO
* CEO sees no Q4 surprise, expects loan book growth in 2010
* Komercni targets dividend of 55-60 pct of net
By Jan Korselt and Jason Hovet
PRAGUE, Dec 4 (Reuters) - Komercni Banka <> will
likely unwind some bad loan provisioning next year as a domestic
economic recovery gains traction, relieving the Czech lender's
corporate client base, its chief executive said on Friday.
Years of double-digit profit growth for the Czech Republic's
only listed bank reversed this year behind provisioning for bad
loans for corporate customers as the Czech economy suffered its
worst recession in a decade.
Komercni Banka, the country's third largest bank by assets,
has seen its cost of risk jump 153 percent annually in the first
nine months this year. The proportion of non-performing loans
has grown to 6.9 percent from 4.2 percent a year before.
In an interview with Reuters, chief executive Henri Bonnet
said the cost of risk was still rising on the retail side but
stabilising on the corporate client side after a sharp rise to
start the year, and overall risk costs would drop in 2010.
"I am confident that we should be able to release part of
the provisions in 2010," Bonnet said in his first interview with
a news agency since taking his post in September.
Analysts have said releasing provisions next year could give
a boost to banks' profit, although margin pressure from renewed
competition could drag on earnings.
Komercni, which is majority owned by France's Societe
Generale <SOGN.PA>, does not provide earnings guidance, but has
said banking income should be stable in 2010. Net profit fell
14.5 percent in the first nine months to 8.4 billion crowns.
TRENDS
Bonnet said the trends seen since the start of the year have
continued in the final quarter. "We are within the trends that
we observed up to the third quarter," he said. "We don't expect
major surprises in the results in the fourth quarter."
He said the bank will also target a dividend payout of 55-60
percent of net profit. The company paid a 180 crown per share
dividend from 2008 profit, unchanged from the year before.
Shares in Komercni Banka trade at 3,830 crowns and have
recovered 127 percent since hitting a six-year low in February.
The bank trades at 13.5 times estimated earnings, above 11.4
for Austrian bank Erste Group <ERST.VI>, which owns the
country's second largest bank Ceska Sporitelna.
Belgium's KBC <KBC.BR>, owner of the largest Czech bank
CSOB, will list up to 40 percent of the unit on the Prague Stock
Exchange next year to raise up to 2.5 billion euros.
Czech banks went through double-digit profit growth in the
economy's boom years starting in 2005 driven by business
expansion and mortgage lending, but stuck to conservative
banking which spared it from the worst of the financial crisis.
The Czech economy is expected to drop nearly 5 percent this
year, with slight recovery forecast by analysts for 2010 as
trade picks up with western trade partners, notably in Germany.
Bonnet said he saw space to grow the loan book next year,
targeting growth in mortgage lending and export financing.
"We see a slight growth on our loan book (next year) in
close relation with the growth in the economy," he said.
"We see more business coming from customers on the FX side,
so there is a kind of shift (in connection with exports)."
Bonnet said the country's mortgage market had potential to
reach 30-35 percent of gross domestic product, from 18 percent
today, although substantial growth would not come until 2011.
"We should in 2010 try to target 25 percent of market
share," he said.
(Editing by David Cowell)
((prague.newsroom@thomsonreuters.com; Reuters Messaging:
jason.hovet.reuters.com@reuters.net; +420-224 190 476))
