During 2023, ZABA recorded NII growth of 70% YoY, NFCI increase of 5%, net banking income growth of 37% YoY, and a net income to majority of EUR 508m, an increase of 105% YoY.
Yesterday, the largest bank in Croatia, Zagrebačka banka published its FY 2023 results, and in this overview, we’re bringing you the highlights. Starting at the top, the Group recorded a net interest income of EUR 688m, representing an increase of 70% YoY. This was supported by the increase in the interest rates we have seen throughout 2023, and as ZABA is the market leader in Croatia, it is usually the one that sets the pace for growth in this regard. While ZABA does not disclose the average interest rate on loans, it does disclose the loan amount. At the end of 2023, loans to customers amounted to EUR 12.6bn, growing by 7% YoY, loans and advances to credit institutions amounted to EUR 2.1bn, an increase of 26% YoY, while debt securities amounted to EUR 1.6bn, an increase of 44% YoY. However, we would like to note that the trend of the loan growth slowdown was also present with ZABA. Compared to 9M 2023, loans to customers increased by only 1.9%.
Moving on, net fee and commission income amounted to EUR 217m, growing by 5% YoY, in line with other banks in the region. Net trading and other income meanwhile, amounted to EUR 54m, declining by 39% YoY, due to lower trading result.
Taken together, this led to a net banking income of EUR 959m, an increase of 37% YoY. In terms of the operating expenses, they amounted to EUR 333m, an increase of 3.7% YoY. No large increases here were recorded, as administrative expenses, the largest category only increased slightly.
Furthermore, ZABA recorded impairments and other provisions of EUR -1m (2022: EUR -67m), meaning that there was a large release of provisions during the year (EUR 16.4m, -73% YoY), as well as the cancellation of impairment on financial assets not measured at FV through the P&L. In other words, the release of provisions means that the amounts reserved for them (and provisions usually refer to the amount a bank reserves for any potential failures of loans, higher levels of risk, etc.) could be released back to the Bank, implying that lower-than-expected risk levels were actualized. Furthermore, the change in the value of financial assets means that the expected losses on them also did not occur, or not to the same degree as was expected.
As a result, EBT increased by 104% YoY to EUR 614m, leading to the income tax also increasing significantly (from EUR 53m to EUR 105m), implying an effective tax rate of 17.1% (2022: 17.6%). Finally, this led to a net income to majority of EUR 508m, an increase of 105% YoY.
ZABA key financials (2023 vs. 2022, EURm)
Source: ZABA, InterCapital Research
Moving on to the balance sheet, ZABA’s total assets grew by 3.9% YoY, to EUR 24.6bn. Of this, the largest contribution came from financial assets at amortised cost, at 12.3% YoY. This includes debt securities, EUR 1.72bn, +44% YoY, loans and advances to credit institutions, +26% YoY to EUR 2.1bn, as well as loans and advances to customers, at +7.2% YoY to EUR 12.6bn. On the other hand, cash, cash balances at central banks, and other demand deposits decreased by 13.3% YoY, to EUR 6.2bn.
In terms of the liabilities, in total they amounted to EUR 21.9bn, growing by 4.5% YoY. This increase was mainly supported by higher deposits from customers, which grew by 5.3% YoY to EUR 20bn. An increase in both corporate and retail deposits was recorded. Meanwhile, deposits from credit institutions decreased, by 28.9% YoY to EUR 666m.
