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Fio Banka - Analysis of 3Q2014 Performance

Language: English
Company: Fio banka
Provider: Helgi Library
Pages: 17

This report analyses the performance of the Bank for the 3Q2014. You will find all the necessary details regarding volume growth, market share, margin and asset quality development in the Bank.

The key highlights are:

Provisions send Fio into the red in 3Q2014...

Fio banka reported a net loss of CZK 23.5 mil. in 3Q14 compared to a net profit of CZK 12.1 mil. a year ago. A high cost of risk is the only reason for the bank's quarterly loss.

...inspite of a solid operating performance

The quarterly loss masks the strong momentum of the bank. Revenue increased nearly 19% yoy in the third quarter while gross operating grew nearly 15% yoy. The figures are even more impressive when measured over the last four quarters:

Loans and deposits increased a further 2.5% and 12.1% qoq respectively in the third quarter. This means 42% yoy in loans and nearly 54% in deposits when compared to September 2013!

With loans accounting for only 27% of customer deposits, the bank seems to have a large potential to continue to grow aggressively.

Margins, Capitalization & Asset Quality

Low margins, a relatively weak capital position and poor asset quality remain the main weaknesses of the bank.

With its origins as a stock broker, Fio banka is not a typical bank yet. Unlike the sector average, Fio still makes most of its revenue from fees and other non-interest income, so all ratios should be taken with a grain of salt.

Having said that, bank's financials suffer from low margins (with NIM at less than 1.0%), weak cost efficiency (costs to income at 70%) and below average profitability as a result (ROE in single digits).

Low capital adequacy (at 10.5%) and a high share of bad loans (and their low provision coverage) seem to be bigger obstacles for further growth.

At the end of September, the share of non-performing loans accounted for 16.3% while provision coverage reached less than 11% of NPLs). Although we assume that a large part of the loans are provided for the purchase of shares and bonds (i.e. having a solid collateral), the mixture of high NPLs, their low coverage and rising cost of risk are worth following.

You will find more details about the bank at

Banking | Czechia | January 11, 2015
Excel Sheet, 17 pages