In 2022, ZABA recorded a net interest income growth of 8.2% YoY, net fee and commission growth of 13.9%, an operating income increase of 11.7%, and a net profit of EUR 248.4m, an increase of 24.7% YoY.
Before we start, it should be noted that all numbers were converted into euros, using the EUR/HRK exchange rates for 2022/2021, provided by the Croatian National Bank. Because of this reason, the numbers, especially relative changes might differ somewhat from the reported changes by ZABA itself.
Starting off with the net interest income, it amounted to EUR 405.5m in 2022, an increase of 8.2% YoY. Even though ZABA does not specify the exact reason for this increase, it can most certainly be attributed to the larger volume of loans issued, as well as an increase in interest rates on those loans, albeit to a lesser degree. Net fee and commission income amounted to EUR 207.5m, representing an increase of 13.9% YoY, which can also be tied to both a larger consumer base (due to the aforementioned higher loan volume) but also a wider array of services offered by the Bank, both to existing and new customers. Next up, the net trading and other income and expenses amounted to EUR 85.9m, an increase of 24.5% YoY, mainly due to higher trading result and other income. In total, this would mean that the net banking income (operating income) amounted to EUR 698.9m, an increase of 11.7% YoY.
Moving on to operating expenses, they amounted to EUR 321.3m, an increase of 8.6% YoY, or EUR 25.5m in absolute terms. Breaking the OPEX down further, administrative expenses increased by 9.9% YoY, or EUR 24.3m, and amounted to EUR 269.8m. Cash contributions to resolutions boards and deposit guarantee schemes more than doubled, growing by 139.4% YoY (or EUR 30m) to EUR 51.5m. A reversal of provisions was also recorded, amounting to EUR 59.8m in 2022, an increase of 187%, or EUR 39m YoY. On the other hand, financial assets not measured at fair value through P&L decreased by 83.8%, or EUR 35.5m, and amounted to EUR 6.8m, while depreciation decreased by 69.2%, or EUR 34.9m, and amounted to EUR 15.6m. ZABA notes that the inflationary pressures on costs were well managed during this year. Furthermore, as we can see in the increase in cash contributions to resolutions boards and deposit guarantee schemes, ZABA reserved a fair amount of money this year for any potentially averse situation. All of this would also mean that the cost-to-income ratio (CIR) amounted to 45.97%, a decrease of 1.3 p.p. YoY, meaning that ZABA managed to outgrow its cost growth with its revenue increase.
Finally, the profit amounted to EUR 248.4m, an increase of 24.7% YoY, due to the aforementioned revenue and cost developments.
ZABA key financials (2022 vs. 2021, EURm)
Source: ZABA, InterCapital Research
Moving on to the balance sheet, the total assets of the Group amounted to EUR 23.67bn, an increase of 12.4% YoY, or EUR 2.6bn in absolute terms. This was driven by an increase in cash, cash balances at central banks, and other demand deposits, as well as financial assets at amortised cost. However, the first category can be quite deceptive. Even though it increased by 39.1% YoY (or EUR 2bn) and amounted to EUR 7.15bn in 2022, there is another position in the balance sheet, the obligatory reserve with the CNB (Croatian National Bank), which amounted to EUR 814m in 2021, and stood at 0 in 2022. This would mean that a large proportion of the increase, albeit not the majority, also came from this source. If we exclude this effect, then the main driver of the growth in assets was the financial assets at amortised cost. In this category, loans, and advances to customers increased by 8.8% YoY (or EUR 951.7m), and amounted to EUR 11.81bn, followed by debt securities, which increased by 157% YoY (or EUR 729.4m) and amounted to EUR 1.19bn, and finally, loans and advances to credit institutions, which increased by 25.5% (or EUR 344.6m) and amounted to EUR 1.69bn. This further supports the viewpoint described above, that the loan volume growth was the key driver in the higher net interest income.
Moving on to liabilities, in total they amounted to EUR 20.98bn, an increase of 15.1% (or EUR 2.75bn) YoY. This was driven by the increase in financial liabilities measured at amortised cost, which by itself was mostly driven by higher deposits from customers. In fact, they amounted to EUR 19.1bn in 2022, an increase of 12.6% YoY (or EUR 2.13bn). This would mean that Zagrebačka banka (the largest bank in Croatia by assets) continually received a large number of deposits, both due to the fact that Croatians hold the vast majority of their financial assets as deposits, but also due to the switch to euro because of which we experienced an increase in deposit growth, especially in the latter part of 2022. On the other hand, this growth in the sheer amount of deposits could further support the aforementioned increase in loan issuances, despite the macroeconomic situation, inflation, and rising interest rates in Europe.
