PRAGUE, Nov 5 (Reuters) - Czech lender Komercni Banka reported a larger-than-expected 57% drop in third-quarter net profit on Thursday as bad loan provisions grew amid the coronavirus pandemic.
The Czech Republic, like other European nations, is facing a strong second wave of coronavirus infections, forcing the government to shut many retail shops, services and public venues.
Banks face the prospect of rising loan defaults as repayment moratoriums expire and the economy struggles to recover.
Komercni Banka, the country’s third biggest lender and majority owned by France’s Societe Generale, said third-quarter net attributable profit fell to 1.65 billion crowns ($72.18 million), below the average estimate of 1.96 billion in a Reuters poll.
Banking income fell to 7.26 billion crowns, roughly in line with expectations. Net interest income fell 11.2% to 5.25 billion crowns as the country’s central bank cut interest rates in the spring.
Komercni Banka’s loan volumes rose 5.9% in the January-September period and it said it expected growth at a mid-single digit pace in all of 2020.
The bank’s cost of risk, reflecting provisioning against losses from loans and investments, reached 1.68 billion crowns in the third quarter, versus 26 million crowns a year earlier.
The bank is due to present an updated strategy plan later on Thursday in which it aims to boost revenue growth to 2025.
$1 = 22.8610 Czech crowns Reporting by Jason Hovet; Editing by Edmund Blair