As of the end of May 2024, Croatian pension funds reported an NAV of EUR 21.3bn, marking a 1.1% MoM increase and a 15.1% YoY increase.
According to the latest data from the Croatian Financial Services Supervisory Agency (HANFA), the NAV of Croatian pension funds amounted to EUR 21.3bn, growing by 1.1% MoM, and 15.1% YoY. In terms of net contributions, in May 2024 they totaled EUR 127.3m. Of this, 83.6% went to Category B funds, 10.6% to Category A, and 5.8% to Category C. Over the past twelve months leading to May, net contributions amounted to EUR 1.36bn.
In terms of absolute changes in NAV, the MoM increase was EUR 230.5m, while the YoY increase amounted to EUR 2.8bn. As such, 55% of the monthly NAV increase came from net contributions, while the remaining 45% came from the growth in the value of assets. Meanwhile, on an annual basis, 48% of the increase came from net contributions, while the larger 52% growth came from the asset value appreciation. It should also be noted that the number of subscribers, as of May amounted to 2.27m, growing by 3.3% YoY. What’s also interesting is how is this supported by the foreign workers’ contributions to the funds. According to the latest data from the Ministry of the Interior, the number of issued work permits in the first half of 2024 amounted to 112.4k, representing 65% of the total amount issued in 2023, or on an annualized basis, app. 224.8k working permits, or a 30% increase YoY. In other words, the net yearly increase in the number of subscribers amounted to 73k, which when we take into account people leaving to their pensions as well as the mortality rate, would mean that a lot of this contribution came from foreign workers. Why is this interesting? According to Croatian law, people have to contribute for 15 years to be eligible for pension payments, and in most cases, foreign workers do not stay for that long in a given country, which in a sense means that they pay money towards a system from which they will not be eligible to receive their pensions afterward unless they stay for the said time period.
Net contributions into the Croatian pension funds (January 2019 – May 2024, EURm)
Source: HANFA, InterCapital Research
Examining asset value changes on a MoM basis, the largest increase was seen in bond holdings, which grew by EUR 156m, or 1.2%. Investment funds and shares followed, growing by EUR 36.7m and EUR 33.1m, respectively, or 1.7% and 0.7%, respectively. On the other hand, receivables and money market holdings declined by EUR 27m or 66.8%, and EUR 21.3m, or 10.2%, respectively.
Looking at annual changes, bond holdings saw the largest absolute increase of EUR 1.57bn or 13.5%, followed by shares with EUR 958m, or 24%, and deposits with EUR 329m, or 55%. On the flipside, money market holdings and receivables declined by EUR 132.8m, or 41%, and EUR 34.6m, or 72%, respectively.
Croatian mandatory pension funds AUM structure change (January 2018 – May 2024, EURm)
Source: HANFA, InterCapital Research
Meanwhile, securities and deposits totaled EUR 16.38bn, increasing by 0.7% MoM and 11.4% YoY. Domestic securities and deposits rose by 0.4%, or EUR 52m, while foreign securities and deposits grew by 3% or EUR 60m MoM. On an annual basis, domestic holdings increased by EUR 1.3bn, or 10%, while foreign holdings increased by EUR 368m, or 11.4%.
Lastly, taking a look at the current asset structure of the funds, bonds remained the largest asset category at 61.7% of total assets, increasing by 0.07 p.p. MoM but decreasing by 0.86 p.p. YoY. Shares accounted for 23.1% of the total, with a MoM decrease of 0.10 p.p. but a YoY increase of 1.67 p.p., while investment funds represented 10.2% of the total, increasing by 0.06 p.p. MoM but decreasing by 0.90 p.p. YoY.
Current AUM of Croatian mandatory pension funds (May 2024, % of the total)
Source: HANFA, InterCapital Research
