Komercni banka: AGM Statement

Translation from the Czech language Komercni banka, a.s. http://www.kb.cz/en Prague 1, Na Prikope 33, building identification number 969, Post Code 114 07 Identification No.: 45 31 70 54 LEI Code: IYKCAVNFR8QGF00HV840 incorporated in the Commercial Register maintained with the Municipal Court in Prague, section B, insert 1360 Disclosed on 5 May 2021 The Information is available also at the following link: https://www.kb.cz/en/about-the-bank/for-investors/shareholders-shares-and-dividends/general-meetings-and-dividend-payment Komercni banka, a.s. informs its shareholders about the Minutes of the Annual General Meeting of Komerční banka, a.s. MINUTES of the proceedings of the Annual General Meeting (hereinafter referred to as the "General Meeting") of Komerční banka, a.s. with its registered office in Prague 1, Na Příkopě 33 Reg. no. 969, postal code 114 07, corporate ID 45317054 (hereinafter referred to as "Komerční banka", the "Company", "KB" or the "Bank") held on 20 April 2022 from 01:00 p.m. at náměstí Junkových 2772/1, Stodůlky, Prague 5, postal code 155 00 Mr Pavel Henzl opened the meeting at 1 p.m. He welcomed those present and stated that he had been appointed by the Board of Directors of the Bank to chair the General Meeting until the election of its Chairman. He further stated that the proceedings of today's General Meeting will be held in Czech and English with simultaneous interpretation. For this purpose, the shareholders were given headphones at the attendance registration desk, which are set up for reception in the Czech language on channel No. 1., and for the English language, channel No. 2 is set. Materials for today's General Meeting are contained in tablets, which shareholders received at attendance registration. Mr Pavel Henzl also asked the shareholders to return both devices to the attendance service staff upon their leaving. Mr Henzl said that the members of the Board of Directors were present at today's General Meeting: Chairman Mr Jan Juchelka, as well as Mr Didier Colin, Mr David Formánek, Mr Jitka Haubová, Mr Miroslav Hiršl and Mr Margus Simson. A majority of the members of the Supervisory Board of Komerční banka, a. s., headed by its Vice-Chair Ms Petra Wendelová, are also present. The Chairman of the Supervisory Board, Mr Giovanni Luca Soma, apologised for urgent work reasons. Also present in the hall is the notary dr. Lucie Foukalová, who will draw up the notarial deed. Mr Pavel Henzl stated that in accordance with the Articles of Association of the Bank in effect, representatives of the audit company Deloitte Audit, s.r.o., are invited as guests to today's General Meeting. At the same time, he announced that the company AV MEDIA had been entrusted with the technical provision of the entire course of the General Meeting, including attendance sheet and voting. He also pointed out that coffee and water were prepared for shareholders in the lobby throughout the General Meeting. Mr Pavel Henzl stated that the statement from the issue of book-entry shares provided on the record date, i.e. 13 April 2022, was used for attendance record. He further stated that, according to the report of the persons in charge of the registration of attending shareholders, the shareholders having shares with a nominal value representing in aggregate 78.877574 % of the Bank's registered capital are present at the General Meeting. He announced that based on the attendance registration information stated, in compliance with the valid Articles of Association, this General Meeting constitutes a quorum and is competent to adopt decisions, and that no objection against the exercise of voting rights has been submitted. Mr Pavel Henzl also asked shareholders to identify themselves by means of a KB identification card, which they will hang around their necks. The card was received by shareholders at attendance registration, as this identification card also serves to register their leave or eventual return, as the case may be. Subsequently, he opened the proceedings of the General Meeting. Mr Pavel Henzl stated that the Notice of the Annual General Meeting and all documents for the meeting were published in Mladá Fronta DNES daily and on websites of Komerční banka on 18 March 2022. He further stated that the business on the agenda of today's General Meeting is stated in the Notice of General Meeting, which the shareholders received as part of the materials for today's General Meeting and is contained in their tablet. The Notice also includes draft resolutions, including their reasoning. He reminded that according to the valid Articles of Association of Komerční banka, a. s., voting is performed using an electronic voting device, i.e. tablets, which the shareholders received at attendance registration. First, the proposal of the Board of Directors is voted on. If the proposal of the Board of Directors is adopted by the required majority, no vote is taken on other proposals. Voting on other proposals or counterproposals is taken in the time sequence in which they were submitted. He also acquainted the shareholders in more detail with the method of voting using the tablets distributed to them. The results of the voting will also be available to shareholders in tablets. The electronic voting device is operated by the buttons FOR (PRO) and AGAINST (PROTI). The voting option will appear on the tablet at the moment when shareholders are asked to vote. The name of the item on agenda voted on is shown at the top of the screen. Shareholders can abstain from voting by not clicking on any voting button when voting. Once the shareholders have voted, the selected option will be highlighted and until the voting is completed, shareholders can change their decision by clicking on another button. If no voting option is highlighted, the shareholder abstains from voting. In case of doubt, the present scrutineers can be asked for assistance. In the event of a failure of the electronic voting device, scrutineers may be asked for a replacement electronic voting device. He further stated that the premises designated for proceedings of the General Meeting are considered to be the premises of this hall and toilets. Upon leaving these premises, the shareholders will be deregistered and upon entry they must be registered again, using the identification card they received at attendance registration. In the event of leaving these premises of the General Meeting, it is also necessary to return the identification card, tablet and interpreting station. Mr Pavel Henzl noticed that the quorum of the General Meeting and the results of the voting will be displayed on the screens here in the hall. Mr Pavel Henzl further informed the shareholders that there is an information centre of the General Meeting available to them at the back of this hall where employees of Komerční banka are ready to answer any questions or provide the relevant explanations. He invited them that at this place they can also submit any written requests for explanations or protests. Mr Pavel Henzl mentioned that this year shareholders can again use an opportunity to vote on proposed resolutions before venue of the General Meeting using an electronic remote communication platform. The conditions of this voting are provided in the Notice of GM. The results of the correspondence voting are included in the quorum of the General Meeting as well as in the results of the voting on individual resolutions. Approval of the rules of procedure and voting rules of the General Meeting, and election of its Chairman, minutes clerk, minutes verifier and persons in charge of votes counting. Mr Pavel Henzl then proceeded to the procedural issues of the General Meeting, i.e. "Approval of the General Meeting's rules of procedure and voting rules and election of its chairman, minutes clerk, minutes verifier and persons in charge of vote counting". He stated that the text of the Procedure and Voting Rules, which stipulate only the technical point of the exercise of voting rights and the proceedings of the General Meeting, is contained in a tablet, which the shareholders received at attendance registration. The rules for conduct of the General Meeting, including the method of voting at the General Meeting and the legal conditions for exercising the voting right, are regulated by the Articles of Association of the Bank. At the same time, he reminded that the shareholders were acquainted with the way of using the tablet as a voting device. Mr Pavel Henzl then raised a question whether any written request for an explanation, a proposal or a counterproposal, or an objection relating to this item of the agenda had been submitted. This was not the case. Then he asked whether there was any oral request for an explanation, a proposal, a counterproposal or objection relating to this item of the agenda. This was not the case. He then stated that before the voting on the proposal to be subsequently presented, the General Meeting represents a quorum and is competent to adopt decisions, as shareholders having shares with the nominal value totalling 78.880584 % of the registered capital of the Bank are present. Mr Pavel Henzl submitted a draft resolution of the General Meeting, on which the shareholders are to vote: Resolution One: The General Meeting approves the rules of procedure and voting rules of the General Meeting of Komerční banka, a. s., in accordance with the proposal submitted by the Board of Directors. He announced that an absolute majority of votes of the attending shareholders is required for adoption of this resolution. Subsequently, he called on shareholders to use the electronic voting device in voting round 1 by clicking on the button FOR to express their consent. To express disagreement then they click on the button AGAINST. If they want to abstain from voting, they need not click on either button. Mr Pavel Henzl called on shareholders to vote. He then asked if anyone else wanted to vote and then closed the voting. After completion of the voting, the Chairman of the General Meeting, Mr Pavel Henzl, stated that according to results of voting the resolution was adopted. He stated that shareholders can view the exact results of the voting on the screens here in the meeting room and will be listed in the Minutes of the General Meeting. The final results of the voting on Resolution One were as follows: in favour voted by shareholders having 131,131,154 votes, which corresponds to 88.024833 % of the number of votes present, shareholders having 1,340 votes, which corresponds to 0,000900 %, voted against, and shareholders having 17,838,143 votes, which corresponds to 11.974268 % of the present number of votes, abstained from voting. Mr Pavel Henzl the presented a proposal of the Board of Directors relating to officers of the General Meeting as follows: Mr Pavel Henzl as the Chairman of the General Meeting, Markéta Batalová as the minutes clerk, Ms Alena Krčilová as the minutes verifier and Ms Tereza Kafková and Ms Eva Novotná as persons in charge of votes counting (scrutineers). He announced that all these candidates are elected only for the proceedings of this Annual General Meeting and their duties will be to ensure its due course in accordance with the requirements of law and the Articles of Association of the Bank. Mr Pavel Henzl then raised a question whether any written request for an explanation, a proposal or a counterproposal, or any objection relating to this item of the agenda had been submitted. This was not the case. Then he asked whether there was any oral request for an explanation, a proposal, a counterproposal or an objection relating to this item of the agenda. This was not the case. Mr Pavel Henzl stated that before the voting on the proposal to be presented, the General Meeting represents a quorum and is competent to adopt decisions, as shareholders having shares with the nominal value totalling 78.880584 % of the registered capital of the Bank are present. Thereupon he submitted a draft resolution of the General Meeting, on which the shareholders are to vote: Resolution Two: The General Meeting elects Mr Pavel Henzl as the Chairman of the General Meeting He announced that an absolute majority of votes of the attending shareholders is required for the adoption of this resolution. Subsequently, he called on the shareholders to use the electronic voting device in voting round 2. After completion of the voting, the Chairman of the General Meeting, Mr Pavel Henzl, stated that according to results of voting the resolution was adopted. The final results of the voting on Resolution Two were as follows: in favour voted shareholders having 131,136,959 votes, which corresponds to 88.025184 % of the present number of votes, shareholders having 20.944 votes, which corresponds to 0.014059 %, voted against, and shareholders having 17,818,734 votes, which corresponds to 11.960757 % of the present number of votes, abstained from voting. Mr Pavel Henzl stated that the election of the minutes clerk would now be put to the vote. He stated that the General Meeting represents a quorum and is competent to take decisions, as shareholders having shares with a nominal value representing a total of 78.880584 % of the registered capital of the Bank are present. Resolution Three: The General Meeting elects Markéta Batalová as the minutes clerk He announced that an absolute majority of votes of the attending shareholders is required for the adoption of this resolution. Subsequently, he called on the shareholders to use the electronic voting device in voting round 3. After completion of the voting, the Chairman of the General Meeting, Mr Pavel Henzl, stated that according to results of voting the resolution was adopted. The final results of the voting on Resolution Three were as follows: in favour voted shareholders having 131,136,903 votes, which corresponds to 88.025147 % of the present number of votes, shareholders having 0 votes, which corresponds to 0.000000 %, voted against, and abstained shareholders having 17,839,734 votes, which corresponds to 11.974853 % of the present number of votes, abstained from voting. Mr Pavel Henzl stated that now election of minutes verifier would now be put to the vote. He stated that the General Meeting represents a quorum and is competent to take decisions, as shareholders having shares with a nominal value representing a total of 78.880584 % of the registered capital of the Bank are present. Resolution Four: The General Meeting elects Alena Krčilová as minutes verifier He announced that an absolute majority of votes of the attending shareholders is required for the adoption of this resolution. Subsequently, he called on the shareholders to use the electronic voting device in voting round 4. After completion of the voting, the Chairman of the General Meeting, Mr Pavel Henzl, stated that according to results of voting the resolution was adopted. The final results of the voting on Resolution Four were as follows: in favour voted shareholders having 131,099,688 votes, which corresponds to 87.999634 % of the present number of votes, shareholders having 1,319 votes, which corresponds to 0.000885 %, voted against, and shareholders having 17,876,530 votes, which corresponds to 11.999480 % of the present number of votes, abstained from voting. Mr Pavel Henzl stated that now the election of a person in charge of votes counting would now be put to the vote. He stated that the General Meeting represents a quorum and is competent to pass decisions, as shareholders having shares with a nominal value representing a total of 78.880584 % of the registered capital of the Bank are present. Resolution Five: The General Meeting elects Tereza Kafková as a person in charge of votes counting He announced that an absolute majority of votes of the attending shareholders is required for the adoption of this resolution. Subsequently, he called on the shareholders to use the electronic voting device in voting round 5. After completion of the voting, the Chairman of the General Meeting, Mr Pavel Henzl, stated that according to results of voting the resolution was adopted. The final results of the voting on Resolution Five were as follows: in favour voted shareholders having 131,179,176 votes, which corresponds to 88.052990 % of the present number of votes, shareholders having 22,263 votes, which corresponds to 0.014944 %, voted against, and shareholders having 17,776,098 votes, which corresponds to 11.932066 % of the present number of votes, abstained from voting. Mr Pavel Henzl stated that now the election of a second scrutineer as a person authorised to count the votes would now be put to the vote. He stated that the General Meeting represents a quorum and is competent to take decisions, as shareholders having shares with a nominal value representing a total of 78.884238 % of the registered capital of the Bank are present. Resolution Six: The General Meeting elects Eva Novotná as a person in charge of votes counting He announced that an absolute majority of votes of the attending shareholders is required for the adoption of this resolution. Subsequently, he called on the shareholders to use the electronic voting device in voting round 6. After completion of the voting, the Chairman of the General Meeting, Mr Pavel Henzl, stated that according to results of voting the resolution was adopted. The final results of the voting on Resolution Six were as follows: in favour voted shareholders having 131,176,695 votes, which corresponds to 88.051325 % of the present number of votes, shareholders having 0 votes, which corresponds to 0.000000 %, voted against, and shareholders having 17,800,842 votes, which corresponds to 11.948675 % of the present number of votes, abstained from voting. Mr Pavel Henzl thanked the shareholders for the confidence shown and asked the other persons elected as officers of this General Meeting to take up their offices. Consequently Mr Pavel Henzl, the Chairman of the General Meeting, announced that he will proceed with the agenda of the General Meeting. Item 1 - Discussion over the annual financial statements for the year 2021 with the proposal for the distribution of profit for the year 2021 and over the consolidated financial statements for the year 2021 The chairman of the General Meeting, Mr Pavel Henzl, said that the shareholders have in their tablet the text of the Annual Report for the year 2021 on this item, which includes the annual financial statements and consolidated financial statements. These documents, along with other documents, have been available at the bank's headquarters since 18 March 2022 and can be downloaded from the bank's website. The vote will take place under items 4, 5 and 6. He subsequently asked the Chairman of the Board of Directors, Mr Juchelka, to present his comment on this item on the agenda. Mr Juchelka welcomed shareholders and members of the Supervisory Board at today's General Meeting and decided to present them with the main information on the state of Komerční banka Group's activities in the year 2021, including the development of the macroeconomic environment, financial and business performance as well as some non-financial activities. Mr Jiří Šperl, KB's Financial Director, will present this part together with him. The Chairman of the Board of Directors, Mr Juchelka, pointed out on page three the development of the main macroeconomic activities in the Czech Republic and informed that Komerční banka is doing business in the Czech Republic and to a lesser extent in Slovakia. The Czech economy recorded a partial recovery in the year 2021 from the slump caused by the Covid-19 pandemic in the year 2020. GDP growth for last year thus reached 3.3 %. Mr Juchelka pointed out that it should be added that the economy is currently facing a number of difficulties, some of which were already manifesting themselves in the year 2021. In particular, the manufacturing industry and the construction sector were hampered by problems with the supply of important inputs, which led to shutdowns and across individual sectors as well as price increases. He also pointed out that the labour market situation has been tense for a long time, with the difficulty of filling vacancies, which limits the development potential of the economy. On the chart at the bottom right, Mr Juchelka showed that inflation has started to accelerate significantly since the first half of last year, and this growth is continuing even now, when price increases have already exceeded double-digit rates. The Czech National Bank, as one of the first central banks, reacted to this development by raising monetary policy rates quite sharply. In view of this, short- and long-term interest rates on the financial market have also been rising. At the end of the year 2021, the Czech National Bank's base two-week Repo rate was 3.75 %, it is now at 5 %, and the yield on the ten-year Czech government bond was 2.7 %, compared to nearly 4 % today. Mr Juchelka also reported that this year the external environment has further deteriorated as a result of the Russian invasion of Ukraine. He summed up that after a short recovery, the Czech economy has found itself in relatively difficult conditions again, but it can be assumed that solid fundamentals will allow the Czech economy to successfully overcome this situation in the medium term. On the other hand, Mr Juchelka pointed out that the new situation caused first by the Covid-19 pandemic and now by the war in Ukraine has underlined the necessity to build a robust and resilient business model for the bank and the whole group, which will enable us to cope with adverse conditions and take advantage of the opportunities presented by the changing environment. In Komerční banka's strategy, factors supporting long-term resilience include not only capital endowment, strong liquidity and prudent risk management, but also socially responsible behaviour in accordance with recognised principles for environmental protection, social environment development and corporate governance. Komerční banka implements its sustainability policy through a number of specific activities. Mr Juchelka also said that KB is aware of the risks arising from climate change and is committed to contributing to their mitigation. KB is moving towards carbon neutrality in the year 2026. Greenhouse gas emissions from the Bank's operations in the year 2021 decreased by 32.5 % compared to the year 2019. The bank offers clients new sustainable products in the areas of financing, investment and consulting. The bank assesses loans provided to corporate clients according to the taxonomy of the European Union, while in the year 2021 KB provided CZK 21 billion in financing to projects with a sustainable positive impact, and this figure will continue to grow. In contrast, KB announced a gradual exit from coal financing by the year 2030. Mr Juchelka also said that in the social field KB is continuing with a number of projects, whether as individual companies of the KB Group or through the Jistota Foundation. Significant activities include joining Komerční banka, the Blue Pyramid and the Essox company in the Gracious Summer initiative, which allowed people in financial difficulties to pay off their debts without fines. He also noted that the Jistota Foundation distributed grants amounting to nearly CZK 20 million last year, of which approximately 7 mil. CZK was used to mitigate the effects of the tornado in southern Moravia. Inside the bank, KB is closing the gender pay gap. It currently stands at 4.2 %, while on the Czech market this difference averages 10-11 %. The bank is also taking steps to ensure that the gender pay gap at KB disappears completely in the coming years. Given its importance, Mr Juchelka also informed shareholders about this year's assistance of the Komerční banka Group and its employees to civilian victims of the war in Ukraine. Komerční banka donated 10 mil. CZK to the Czech Red Cross to buy medical supplies and equipment for Ukraine and another 5 mil. CZK was collected between employees of Komerční banka and the Komerční banka Group. KB, or its Jistota Foundation, doubled this amount and donated to non-profit organizations helping refugees from Ukraine in the Czech Republic. Komerční banka has also provided its accommodation facility in Prague at Palmovka and several apartments elsewhere in the country to accommodate refugees. Mr Juchelka also said that the bank has created a special current account for refugees, which provides a contribution of CZK 2,000 and several other benefits, such as payments to Ukraine without a fee or access to online medical advice. Mr Juchelka also noted that in the new situation, the overall revision of client information in line with the latest regulations, which we finalized last year, is also proving particularly prudent and has significantly reduced the risk that KB's financial services could be used to circumvent sanctions or money laundering. Strengthening our protections against cyber-attacks and for fraud prevention seems equally important. The Chairman of the Board of Directors, Mr Juchelka, was also pleased to say that Komerční banka's efforts were also appreciated in independent surveys and awards. Among other things, KB won the titles Top Responsible Large Firm for the year 2021, Sustainable Bank of the year 2021 and won the SDG Award for non-financial reporting. Mr Juchelka also said that the bank greatly appreciates the award The Bank of the Year 2021 Czech Republic, which KB received from the renowned magazine The Banker. The international jury focused on how the banks helped their customers and the economy in the pandemic, on the banks' ability to constantly innovate, as well as on a sustainable approach to business. All these values are also reflected in Komerční banka's strategic plan, KB Change 2025, which updates Komerční banka's strategic direction and responds to new challenges and opportunities for building a strong client-focused bank. Mr Juchelka noted that he had presented the new strategy to shareholders last year and now shared the first deliveries in its implementation in the year 2021. Mr Juchelka further informed that Komerční banka's goal is to build together with its clients a better and sustainable future through responsible and innovative financial solutions. KB wants to be a leader in a new era of banking for 2 million active clients. The strategy builds on the pillars of responsiveness, development and responsibility. During the year 2021, the Bank has already made tangible progress in the ten areas in which the KB Change 2025 strategy is being developed. Mr Juchelka further presented that the building of a new digital bank with a core built on the Temenos Transact system has already reached the first phase, in which a functional bank with basic functionalities is being tested by five hundred clients from among the Bank's employees, while noting that he is pleased to be one of these testers. Chairman of the Board of Directors Mr Juchelka noted that branches remain an important building block of KB's multi-channel strategy. The bank has created a new model of servicing and designing branches, more favourable for providing advice and dealing effectively with clients' various financial needs. The first branch under the new concept was opened in July 2021 in Prague-Dejvice. Komerční Banka is adapting its organisation towards fully digital sales and services. In the mobile banking application, clients have been able to obtain several other products since last year, such as consumer credit, property insurance, savings account, overdraft or wallet insurance. The share of consumer credit sales made completely through digital channels increased to 29 % in the year 2021, from 11 % in the year 2019. In addition, 19 % of "My Account" accounts were set up digitally, up from 4 % in the year 2019, and approximately 15 % of framework contracts for investment in mutual funds were negotiated fully online in the year 2021. Mr Juchelka also said that KB is building an ecosystem of additional financial services with the aim of providing new sources of revenue, through its own development, cooperation with both start-up and established service providers, including the acquisition of shares in fintech companies through its 100 % owned subsidiary KB SmartSolutions, s.r.o. He informed that recent activities include the establishment of Finbricks, s.r.o., an aggregation platform for financial services operating under the PSD2 Directive, an internal startup founded by our colleagues, an increase in Komerční banka's share in upvest s.r.o., a crowdfunding platform for real estate projects, as well as the launch of digital identification services for public sector services through Banking Identity, and a joint offer with ČEZ ESCO for the installation of photovoltaic power plants on the roofs of residential houses as well as industrial factories. Mr Juchelka also presented that Komerční banka and Modrá pyramida stavební spořitelna, a.s. are also building a new common infrastructure and front-end system for products focused on housing financing. Komerční banka aims to strengthen its leading position in the market in services for corporate clients, it introduced the advisory portal spolecne-udrzitelne.cz for sustainable development and transformation of business models. Corporate clients also appreciated the new Trade & Finance Online platform for managing documentary payments, guarantees and other international business services. In year-on-year terms, KB's market share in corporate lending improved by around half a percentage point to 17.6 % at the end of the year 2021. Mr Juchelka informed that Komerční banka intends to contribute to climate protection by supporting a fair, ecological and inclusive energy transition, while respecting that not all energy sources are equivalent in cost to consumers and that the energy sector represents thousands of jobs. The Bank has committed to counteract global warming and reduce its direct emissions in line with the scenario of not exceeding 1.5°C under the Paris Agreement. In addition, Komerční banka will contribute to carbon emission reduction projects with the aim of achieving carbon neutrality of its own operations by the year 2026. In the year 2021, the Bank's total emissions decreased by 32.5 % compared to the year 2019 to 23,090 tonnes of CO2 equivalent, representing 14.7 kilograms per client. The measurement is audited annually by the non-profit organization Prefered by Nature. In addition, Mr Juchelka, Chairman of the Board of Directors, said that for the year 2021, the bank concluded credit agreements amounting to CZK 21.9 billion to finance projects with a sustainable positive impact and introduced new products compatible with environmental and social objectives, such as mutual funds investing in companies that do business in accordance with environmental, social responsibility and corporate governance standards, the so-called ESG; consultancy and financing of energy savings projects and renewable energy sources; or payment cards made from recycled plastics. Komerční banka also committed to gradually reduce to zero its exposure in projects actively related to the coal sector by the year 2030. On this basis, the bank no longer provides new financial products to clients who have more than 50 % of revenues related to coal. For existing clients who have more than 25 % of their revenues linked to the coal sector, KB is refraining from providing new products or services unless there is a public, time-limited plan for the transition to leaving the sector. Mr Juchelka said that Komerční banka has further strengthened its capabilities in the area of cyber security and fraud prevention. In the area of credit risk, tools using machine learning algorithms have been implemented to identify and evaluate early warning signals regarding the bank's exposure to corporate clients, allowing the bank's analysts to save time on routine monitoring and to focus on more complex cases. The deployment of new risk management modules has supported the automation and digitisation of credit provision. The increase in the average frequency of bank application updates to 11 per product per year has improved KB's ability to deliver product innovations and to respond to client requests or alerts. The implementation of the Objectives and Key Results methodology, the so-called OKR, has strengthened the agile and effective cooperation and consistent target setting throughout the bank. To increase efficiency and strengthen internal know-how, Komerční banka has also created several dozen new jobs to provide tasks that were previously purchased from external suppliers. Along with the centralization of the main support functions across the Komerční banka Group, the headquarters of all remaining subsidiaries have moved to the KB Group headquarters in Prague-Stodůlky, with the exception of ESSOX, which remains managed from České Budějovice. The average number of employees for the year 2021 has decreased by 4.6 % compared to the previous year. Mr Juchelka added that as of 1 April this year, Komerční banka has closed another 25 branches and 19 branches are newly providing cash services via ATMs. On the next page of the presentation Mr Juchelka showed that the operational objectives of the plan are formulated for the Bank itself, i.e. not the consolidation entity. The aim is to increase the level of customer satisfaction measured by the Net Promoter Score in the retail and small and medium-sized segments, while stabilising this satisfaction at an already very high level of more than 50 positive points in the large corporate customer segment. Compared to the year 2019, customer satisfaction with Komerční banka in all segments has increased and even exceeds the target level for corporate clients. The improvement in the year 2021 was contributed by high satisfaction with digital channels and a significantly better perception of the stability of the Bank's systems. The traditional strength remains the quality of advice provided by bank advisors. Mr Juchelka further informed that the excellent experience of clients with different sales channels should have helped the bank to increase the number of customers to 2 million by the year 2025, including a possible boost to growth through acquisitions. In the year 2021, the number of the Bank's clients decreased slightly, but this was influenced by the termination of client relationships, about which the bank did not have the full set of information needed to fulfil regulatory obligations in the area of prevention of money laundering and circumvention of sanctions. Mr Juchelka further noted that branches will remain an important contact point for clients, but given the trend of providing services in the digital environment, the Bank plans to operate 200 branches by the year 2025. At the end of the year 2021, Komerční banka had 242 branches and this number further decreased by 25 in April this year. Optimising operations through digitisation, branch reduction and switchover to cashless banking, automation of support functions and deployment of robotics will mean that the full operation and services of the bank itself will be provided by approximately 5,500 employees. At the end of the year 2021, there were 6,743 employees. Mr Juchelka also stated that the improved working and management methods will lead to employee empowerment and effective teamwork throughout the company. Improving motivation, importance perception, recognition and effective management should help to achieve further improvement in the level of employee engagement measured by its own composite index to 83 points, compared to the already high score of 78 points in the year 2019 and 77 points in the year 2021. Komerční banka has chosen the globally recognized FTSE4Good index of sustainably managed companies as a benchmark for achieving success in the environmental, social and administrative areas. The goal for this index will be to exceed the level of 4 points, compared to 3.3 points in the year 2021. The Chairman of the Board Mr Juchelka further commented on the consolidated business results. A clear trend is the rapid transition of service provision to mobile banking. The volume of payments via KB mobile banking increased by 181 % year-on-year and mobile banking is already used by 1,034,000 clients, which is approximately 64 % of all the Bank's clients. The number of clients using the KB key authentication application, of which there are less than one million, is also growing rapidly. In terms of product sales, digital channels have the largest share in the area of consumer loans, with 63 % of newly granted loans in the bank going through the digital environment and in Essox almost all of them, or more precisely 98 % of the loans provided. Mr Juchelka further informed that Komerční banka achieved good business results in both loans and deposits in the year 2021. The growth of the Group's loan portfolio reached the level we had planned, i.e. roughly 7 %. Contrary to expectations, housing loans grew faster, but this was offset by slower-than-planned growth in consumer loans. The Group's retail loan portfolio grew marginally slower than this segment of the entire Czech market. The financing of corporate clients fulfilled the ambitions for the year 2021 despite the fact that businesses were still cautious about launching new investment projects and that the reported crown value of loans to businesses, often provided in euros, was negatively affected by the strengthening of the Czech currency. Komerční banka's market share in corporate lending increased year-on-year. On the next page, Mr Juchelka showed a selection of several prestigious deals on the Czech banking market in the year 2021, in which KB participated in an exclusive or significant role. Mr Juchelka was proud to point out that the capital strength and excellent liquidity endowment enable Komerční banka to finance the most important transactions of the Czech economy and development activities of the Czech economy, across all sectors throughout the country. Komerční banka thus significantly supports the economic growth of the Czech Republic. Furthermore, Mr Juchelka said that the growth in deposits even slightly exceeded the budgeted level, especially in the segment of citizens, where KB strengthened its market share in the year 2021. Komerční banka's high liquidity strengthens the Bank's competitiveness on the market and deposits are now an important driver of interest income growth, as Mr Jiří Šperl, a colleague, will shortly describe. With a loan-to-deposit ratio of 76 %, Komerční banka has created an excellent space for further expansion in business and financing. On another page, Mr Juchelka showed that the KB Group has also managed to accelerate the growth of the total volume of non-bank assets of clients under management, i.e. in mutual funds, pension fund or life insurance. In this way, the assets of clients in mutual funds grew the fastest, and this growth was accompanied by a gradual shift of clients' preference to equity products, which corresponds to KB's strategy. Mr Juchelka also said that the influence of these business results on the Group's financial performance will be discussed by Mr Šperl, CFO of Komerční banka, and he thanked for his attention. The Chairman of the General Meeting, Mr Pavel Henzl, then invited Mr Šperl, the Executive Director for Strategy and Finance, to comment on this item and on the item Approval of Acquisition of Own Shares and on the item Decisions on Designation of an Auditor to Perform a Statutory Audit for the year 2022. Mr Šperl greeted the shareholders and decided to comment on five items on the agenda of the General Meeting, namely Consolidated Financial Statements, Annual Financial Statements, Proposal for Distribution of Profit for the year 2021, Proposal for Designation of an Auditor for the year 2022 and finally a proposal for Approval of Acquisition of Own Shares. Mr Šperl started by commenting on the financial statements and results of the KB Group for last year. He said that the business results of last year were very satisfactory, so the financial results correspond to this. He noted with satisfaction that the KB Group was able to generate approximately CZK 12.7 billion in net profit after tax for last year, i.e. almost 60 % more than in the previous year. On the graph he showed that almost all categories, with the exception of income tax, contributed positively to this result. This is understandable and logical, because bigger profits pay more taxes. Mr Šperl mentioned the biggest contributors to the year-on-year increase in profit, which was primarily the significantly reduced cost of risk, which added approximately CZK 3.8 billion in year-on-year terms due to the excellent payment discipline of the Bank's clients, despite the environment of the covid pandemic. Revenue grew by 5.7 % year-on-year, while costs grew by only 0.7 %. This led to a further improvement of one of the key indicators of operational efficiency of the KB Financial Group. In this area, the Bank has long been among the market leaders not only in the Czech Republic but also in Europe. This fact was also reflected in other key indicators of the Group's profitability. Mr Šperl mentioned one, namely the profitability of tangible capital (or ROTE), which reached almost 12 % last year, and the Bank's management expects the trend of improvement to continue this year. Mr Šperl also said that the key categories of the baRead More

Komercni banka: AGM Statement

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