In Q1 2022, ZABA recorded an increase in operating income of 4.7% YoY, and a net profit of HRK 629m, an increase of 55.7% YoY.

In Q1 2022, ZABA’s net interest income amounted to HRK 691m, a decrease of HRK 27m (or -3.8%) YoY, mainly due to lower interest margins, following the market developments. Net fee and commission income amounted to HRK 358m, an increase of 13.3% (or HRK 42m). Net trading and other income and expenses amounted to HRK 199m, an increase of 25.9% YoY (or HRK 41m), due to a higher dividend income and trading result.

In total, the Group’s operating income amounted to HRK 1.25bn, an increase of 4.7% because of the above-mentioned increases in net fee and commission income and net trading and other income and expenses. Meanwhile, operating expenses amounted to HRK 550m, at roughly the same level YoY. The cost to income ratio equals 40.07%.

Moving further down the P&L, profit before impairment and other provisions amounted to HRK 662m, an increase of 15% (or HRK 87m) YoY, as a result of the previously described movements in the op. income and OPEX. Impairment and other provisions amounted to HRK 61m, an increase of HRK 159m compared to Q1 2021’s HRK -98m.

In total, because of net banking income growth of 4.7% and positive cost of risk in this quarter, ZABA’s net profit amounted to HRK 629m, an increase of 55.7% (or HRK 225m) YoY.

Moving on the balance sheet, total assets increased to HRK 160.9bn, an increase of 1.5% (or HRK 2.41bn) YoY. Breaking the total assets into their components, here we can see several developments. The largest absolute increase comes from the financial assets at amortised cost, which grew by HRK 1.8bn (or 1.9%) YoY and amounted to HRK 97.1bn. Within this category, loans and advances to customers grew by HRK 3.3bn (or 4%) YoY, and amounted to HRK 84.9bn, driven by an increase in corporate and retail lending. At the same time, debt securities grew by 25.2% (or HRK 882m) and amounted to HRK 4.38bn. The only category within this segment that decreased was the loans and advances to credit institutions, which declined by -23.5% (or HRK -2.39bn) YoY and amounted to HRK 7.79bn. The only other component which contributed to the growth of total assets was the cash, cash balances at central banks and other demand deposits, which grew by HRK 1.18bn (or 3.1%) and amounted to HRK 39.9bn.

Looking over to the liabilities side, total liabilities also increased by 1.5% (or HRK 2.02bn) YoY and amounted to HRK 139.2bn. The growth in liabilities was driven by an increase in deposits from credit institutions, which grew by 33.1% (or HRK 1.66bn) and amounted to HRK 6.66bn, driven by an increase in demand and term deposits. The 2nd driver of liabilities growth was the deposits from customers, which grew by 0.3% (or HRK 362m) and amounted to HRK 127.8bn, by far making it the largest liabilities component. Equity also experienced growth, increasing by 1.8% (or HRK 385m) and amounting to 21.7bn.

ZABA Key Financials (Q1 2021 vs. Q1 2020, HRKm)

Impact of COVID-19 and the Russia-Ukraine conflict

The Group also touched on the impact of the COVID-19 pandemic and the Russia-Ukraine conflict. Regarding COVID-19’s impact, as Q1 results refer to the period until 31 March 2022, the uncertainty regarding the pandemic was still present, and as such, the measurement of financial and non-financial assets in the balance sheet was impacted by the uncertainty of the outcome from the pandemic. Regarding the Russia-Ukraine conflict, as of the end of March 2022, the Group’s assets are not significantly affected by the geopolitical situation. However, they note that the Group’s operations might remain indirectly affected as the overall macroeconomic situation evolves.