UPDATE 1-Czech Komercni Banka beats profit estimates, aims for dividend return

(Adds CEO comments, more on outlook, strategy)

PRAGUE, Feb 10 (Reuters) - Czech lender Komercni Banka on Wednesday posted fourth quarter net profit above estimates, helped by lower-than-expected provisions during the COVID-19 pandemic.

The bank, the third largest in the Czech Republic and majority owned by France’s Societe Generale, forecast its cost of risk, reflecting provisioning for loan losses, would decrease slightly in 2021.

Revenue should stabilise this year after a 9% drop in 2020.

The bank, with capital adequacy of 22.3% that is well above the regulatory minimum, also said it aimed to resume dividends as soon as regulators allow, with discussions starting in March.

The Czech National Bank (CNB) has said it would set profit distribution restrictions conservatively and would assess dividend proposals on an individual basis after 2020 results.

Komercni Banka’s full-year net profit fell 45% in 2020 to 8.16 billion crowns ($384.60 million). Fourth-quarter attributable net profit dropped to 2.07 billion crowns, beating the average estimate of 1.72 billion crowns in a Reuters poll.

The bank’s cost of risk hit 1.17 billion crowns in the quarter, which was less than expected. The non-performing loan rate hit 2.6%.

Net banking income fell 10%, including an 11% net interest income decline as interest rates remained low.

Komercni Banka said it expected flattish revenue in 2021 with continued pressure on interest income. Net fees should rebound by mid-single digits on improved economic activity.

The bank laid out a strategy plan in November to increase revenue and digital banking services in the coming years. The largest part of investment should come this year.

It comes as the Czech market, dominated by foreign-owned banks, sees potential consolidation. Czech billionaire Petr Kellner’s PPF group has sought control of MONETA Money Bank through a share offer and combining the bank with its Air Bank unit.

Komercni Banka Chief Executive Jan Juchelka said the bank stayed open to potential acquisition opportunities.

“We believe we will be able to achieve what we plan on organic growth mainly, while keeping eyes open for potential inorganic growth opportunities down the road,” he said.

$1 = 21.2170 Czech crowns Reporting by Jason Hovet; Editing by Devika Syamnath