In Q1 2023, ZABA recorded a net interest income increase of 58.9% YoY, a net fee and commission income growth of 11.1%, op. income increase of 27.8%, and a net income to majority of EUR 119.2m, an increase of 42.9% YoY.
The net interest income amounted to EUR 145.8m in Q1 2023, representing an increase of 58.7% YoY. No details are provided by ZABA as to why this increase happened, however for the most part this income comes from either volume of loans issued or the interest rates at which the loans are issued, the growth is a combination of these two factors. This is in line with the trend that we have seen in Croatia in the last year, with higher interest rates, but also continued loan growth. As the largest bank in Croatia, ZABA is expected to take the lead on this, being among the first to be able to increase the interest on loans, which is visible from this result. Later on, as we’ll see in the balance sheet, the reduction in the overall loan amount to customers means that this increase came primarily as a result of higher interest rates. Net fee and commission income also grew, increasing by 11.1% YoY to EUR 52.7m. Net trading and other income and expenses amounted to EUR 13m, a decrease of 50% YoY, mainly because of the lower trading result.
Overall, this would mean that the Group’s operating income amounted to EUR 211.8m, an increase of 27.8% YoY. Operating expenses amounted to EUR 80m, an increase of 9.6% YoY. Of this, administrative expenses increased by 9.2% and amounted to EUR 66.4m, provisions were also increased, almost doubling to EUR 4.6m. Meanwhile, they also recorded a recovery of financial assets that are measured at fair value through the P&L, as they increased more than 2x to EUR 20.7m.
All of this combined resulted in profit before impairment and other provisions of EUR 126m, an increase of 42.32% YoY. In terms of impairments and provisions, they amounted to EUR 16m, an increase of 100% YoY. Finally, the net income of the Group amounted to EUR 119.2m, an increase of 42.9% YoY.
ZABA key financials (Q1 2023 vs. Q1 2022, EURm)
Source: ZABA, InterCapital Research
Moving on to the balance sheet, we can see that the total assets of the Group amounted to EUR 22.9bn, representing a decrease of 3.1% YTD, or a reduction of EUR 728.9m. In the assets themselves, the largest decrease was recorded by deposits from credit institutions, which declined by 6.3% and amounted to EUR 6.7bn. In the category “financial assets at amortized costs”, we can see that loans also recorded a noteworthy decrease, decreasing by 2.4% (or EUR 317.9m) to EUR 13.2bn, while at the same time, bond holdings in this category increased by 10.3% (or EUR 122.9m), to EUR 1.32bn.
Taking a look at the liabilities side, total liabilities also decreased, declining by 4.1% (or EUR 850.6m), and amounted to EUR 20.1bn. Of this, by far the largest driver was the decline in deposits, which decreased by 4.1%, or EUR 833.9m, and amounted to EUR 19.4bn. Meanwhile, the total equity increased by 4.5% (or EUR 121.5m), mainly as a result of the higher retained earnings, which increased by 22% (or EUR 248.3m), and amounted to EUR 1.37bn. This increase was partially offset by lower net income attributable to the parent company, which decreased by 52% (or EUR 128.7m), to EUR 119.2m.
