In Q1 2022, HPB recorded a net interest income decrease of 7.1% YoY, a net fee and commission income increase of 1.8%, operating income decrease of 17.8%, and a net profit of HRK 30m, a decrease of 25% YoY.
Hrvatska Poštanska Banka (HPB) publishes its Q1 2022 results. According to the report, net interest income decreased by 7.1% YoY to HRK 126m, due to the lower market interest rates, lower gross loans portfolio, strong competition in the banking market, as well as the fact that the interest expenses management in Q1 2022 (-35.5% YoY) did not offset the decrease in interest income (-8.6% YoY). Net fee and commission income increased by 1.8% to HRK 43m due to the recovery in economic activity.
Operating income decreased by 17.8% YoY and amounted to HRK 157m, on the back of a lower net interest income and lower net trading income. Net loss from trading (HRK -28.8m compared to Q1 2021) is a result from the strong yield growth and falling govt. bond prices triggered by the inflation growth and monetary tightening policies of the ECB and FED, further intensified by the war in Ukraine.
Operating expenses increased by 8.6% to HRK 126m, due to the higher administrative costs. Higher administrative costs were driven by higher employee costs resulting from investments into internal IT resources, as well as the activities related to the introduction of the Euro in Croatia. As a result, operating profit decreased by 59.5% to HRK 30m.
HPB also recorded a decrease in provisions, which decreased from HRK 25m to HRK 0m, which had a positive influence on net profit but could not offset the lower operating profit. As a result, the bank recorded a net profit of HRK 30m, a 25% decrease YoY. With the increase in expenses and a decrease in operating income, the cost to income ratio also grew significantly, increasing by 19.8 p.p. to 80.8%. Finally, the net interest margin decreased by 0.3 p.p. to 1.8%.
Looking over to the balance sheet, in Q1 2022, total assets increased by HRK 893m since the beginning of the year, as a result of an increase in liquid assets (+9.3%), primarily due to a continuous increase in deposits. At the same time, gross loans increased by 2.2% and amounted to HRK 16.1bn, while securities decreased by 5%. Meanwhile, on the liabilities side, deposits increased by 4.5% and amounted to HRK 24.5bn, with the largest increase from the Small and Medium Enterprises (SMEs), which grew by 12.1%, the central state and large corp. segment grew by 8%, while the financial markets grew by 5.2%. Non-performing loans (NPL) ratio decreased by 0.5 p.p. to 9.2%.
HPB Key Financials (Q1 2021 vs. Q2 2022, HRKm)
Acquisition of Sberbank & brief overview of Q1 2022 results
HPB also touched on their acquisition of Sberbank, which happened during Q1 2022. With the addition of Sberbank (now rebranded as Nova hrvatska banka and part of the HPB Group), HPB added HRK 11bn of assets to its portfolio. With this addition, HPB has a total of HRK 39bn of assets, still maintaining its position as the 6th largest bank in Croatia, but coming really close to the 5th largest bank, Raiffeisenbank which has assets of HRK 42bn. During Q1 2022, Nova hrvatska banka recorded a net profit of HRK 3.2m a decrease of 63.6% YoY, resulting from a loss of trading due to lower govt. bond prices. Furthermore, the effect of the CHF lawsuits in the amount of HRK 9.8m is also taken into account. The bank also achieved a net interest margin of 2.8%, a 0.1 p.p. increase YoY, and an NPL coverage ratio of 73.4%, a 1.5 p.p. increase YoY.
The integration of Sberbank with HPB is evisaged for the next year, while the inclusion of Sberbank’s financial results in the consolidated financial statements of HPB are to be published in H1 2022 results.
