In Q1 2024, ZABA recorded NII growth of 24% YoY, NFCI increase of 8%, net banking income growth of 19%, and a net income to majority of EUR 154m, representing an increase of 29% YoY.
On Friday, ZABA published its Q1 2024 results, and in this overview, we’re bringing you the highlights. During Q1 2024, ZABA recorded a net interest income of EUR 181m, growing by 24% YoY. While ZABA does not detail how this developed, by looking at the bank’s balance sheet and the general trends in the industry, we can make some precise predictions. The lines in the balance sheet we’re interested in are cash, cash balances at central banks, and other demand deposits, as well as financial assets at amortised cost. The first category includes the deposits that ZABA holds at the central bank, which yields return of 4% based on the ECB key deposit interest rate, which is on this level from 30 Sept 2023.
This category decreased by 24% YoY, and amounted to EUR 5.06bn in Q1, showing that while ZABA did invest in this and is yielding returns, they have reduced their position. Even so, this positively influences the NII as the rates on these deposits are higher now than they were in Q1 2023. The other category, financial assets at amortized cost includes debt securities, loans and advances to credit institutions, and loans and advances to customers. In other words, the loans that ZABA gave to other banks, the loans issued to clients, and the bonds they hold yield returns. Debt securities increased by 41% YoY and amounted to EUR 1.86bn, loans and advances to credit institutions grew by 144% YoY to EUR 2.58bn, while loans and advances to customers increased by 6% to EUR 12.9bn.
As such, it can be summarized that the returns that ZABA is getting in its net interest income came from the larger asset base across these categories, but also due to higher interest rates on these assets, especially loans to customers. Moving on, net fee and commission income grew by 7.5% YoY to EUR 57m, also indicating that customers continue using ZABA’s various services. This is also a positive development, as for other banks this category saw stagnation or even a slight decrease. Given ZABA’s market leader position in Croatia however, this isn’t unexpected.
Together, this led to a net banking income of EUR 252.9m, growing by 19% YoY. In terms of operating expenses, they amounted to EUR 82m, growing by 2.5% YoY. Impairments and other provisions also remained roughly unchanged, at EUR 15m, decreasing by 6.3% YoY. All taken together, this resulted in a net income to majority of EUR 154m, growing by 29.4% YoY.
ZABA key financials (Q1 2024 vs. Q1 2023, EURm)
Source: Zagrebačka banka, InterCapital Research
Taking a quick look at the balance sheet, total assets grew by 6% YoY to EUR 24.3bn, mainly supported by the aforementioned increase in loans and debt securities, while cash and cash balances at the central bank decreased. On the other hand, total liabilities increased by 7% YoY and amounted to EUR 21.5bn, mainly supported by higher deposits from customers, which also grew by 7% and amounted to EUR 19.6bn. Equity meanwhile, amounted to EUR 2.8bn, growing by 1% YoY.
