February 7, 2018 / 9:04 AM / a year ago

Czech bank Moneta chief sees consolidation coming to market

PRAGUE, Feb 7 (Reuters) - The Czech banking sector is likely to see consolidation in the coming years, especially with the newer lenders facing challenges, the head of Moneta Money Bank said on Wednesday.

In a conference call after Moneta released full-year results, Chief Executive Tomas Spurny said the bank was monitoring potential acquisitions and, on the other side, management would support being a target for the right price.

The bank, the sixth largest in the Czech Republic, reported a 3 percent drop in 2017 net profit to 3.9 billion crowns ($191.30 million) and proposed paying out 104 percent of earnings in an 8 crowns per share dividend.

Shares rose 1.8 percent to 84 crowns in morning trade.

Moneta debuted on the Prague Stock Exchange in 2016 and has pledged to return banking revenue to growth while providing shareholders with a high dividend to bring down excess capital.

It committed on Wednesday to delivering “a solid dividend stream” over the next four years but said the policy could change if acquisition opportunities arise.

“Should a clear opportunity arise we (would) seek an acquisition,” Spurny said, adding any deal would need to boost the bank’s earnings per share and dividend capacity in a short timeframe.

“Alternatively, I can imagine a situation where someone comes to us and offers a good premium for the bank and the management would support such a situation wholeheartedly. So if someone wants to buy us it is also fine.”

He said Moneta’s primary growth strategy was still organic but the market may be ready for consolidation now that the central bank is raising interest rates.

The Czech banking sector has remained strong and avoided the problems others in Europe saw in the global financial crisis. Most lenders are foreign owned, with the three biggest controlled by Belgian group KBC, France’s Societe Generale and Austria’s Erste Group Bank .

A shakeout in the smaller end of the market is possible in the next one to three years, Spurny said, after a number of new entrants emerged in the last half decade, often offering free services to build client bases.

“I think there is a layer of banks that have not made really any money or sustainable returns for the last five years,” Spurny said.

“I firmly believe that the market does have to consolidate.”

$1 = 20.3870 Czech crowns Reporting by Jason Hovet, editing by Louise Heavens

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