In 2021, ZABA recorded a decrease of net interest income of 8.2% and an increase of net profit of 49.3% YoY.

In 2021, ZABA’s net interest income amounted to HRK 2.82bn, a decrease of HRK 253m (or -8.2%) YoY, mainly due to lower net interest margins, due to market developments. Net fee and commission income amounted to HRK 1.37bn, an increase of HRK 99m (or +7.8%). Net trading and other income and expenses amounted to HRK 519m, an increase of HRK 67m (or +14.8%), due to higher trading results.

Net banking income amounted to HRK 4.71bn, a decrease of HRK 87m (or -1.8% YoY). Within the net banking income, the largest increase was seen in gains on financial assets and liabilities held for trading, which increased by HRK 348.1m (or 203.1%), while the largest relative decrease was experienced on FX differences, which went from positive HRK 70.1m to a negative HRK -252.3m.

Operating expenses stayed at roughly the same level YoY, amounting to HRK 2.23bn. Impairment and other provisions amounted to HRK 505m, a decrease of HRK 643m (or 56%) YoY, mainly due to higher impairment losses in 2020 following the outbreak of COVID-19. Because of this, profit from operations amounted to HRK 1.82bn, an increase of 54.8% YoY. All of this led to a net profit of HRK 1.49bn, an increase of 49.3% YoY.

Looking over to the balance sheet, total assets amounted to HRK 158.5bn, an increase of HRK 8.65bn (or 5.8%) YoY. This increase was mainly driven by an increase in Cash, cash balances at central banks, and other demand deposits, which grew by HRK 5.17bn or 15.4% YoY, and financial assets at amortized cost, which increased by HRK 1.69bn or 1.8% YoY. Loans and advances to customers, which have the largest share of total assets at 51.5%, remained at the same level YoY.

On the flip side, total liabilities amounted to HRK 137.2bn, an increase of 7.21bn or 5.5%. This increase was mainly driven by an increase in deposits from customers, which increased by HRK 10.2bn (or +8.7%) and amounted to HRK 127.4bn. At the same time, however, this increase was offset by a decrease in deposits from credit institutions, which declined to HRK 5.01bn, a decrease of HRK 3.56bn or 41.6% YoY. This decline was mainly due to the repayment of intragroup funding and lower placements from other banks. This would amount to a L/D ratio of 64.1%, a decrease of 5.3 p.p. YoY.

ZABA Key Financials (HRKm)

In the period from 22 Feb 2021 till 20 Feb 2022 the value of taxable invoices increased by 24.9% YoY amounting to HRK 208.4bn. The spending amount is 6% higher than spending in a comparable period in 2019/2020, yet again indicating positive sentiment. The value of last week’s taxable invoices is up 23.3% YoY, while compared to the week before it was also up 2.7%.

By looking at the latest announcements from the Tax Administration of the Republic of Croatia, in the period from 22 Feb 2021 till 20 Feb 2022, the value of taxable invoices increased by 24.9% YoY amounting to 208.4bn. This growth in taxable invoices represents positive sentiment in consumption, especially taking into consideration that consumption is yet again, 6% higher than in the 2019/2020 comparable period (25 Feb 2019 – 23 Feb 2020). Taxable invoices in wholesale and retail trade in the period from 22 Feb 2021 till 20 Feb 2022 grew by HRK 19bn YoY (an increase of 15.7%) and it is also 7.5% above the value of spending level in this segment in the same period in 2019.

The value of taxable invoices in all segments in the week from 14 Feb to 20 Feb 2022 witnessed double-digit growth of 23.3% YoY. Compared to the same week in 2020 consumption witnessed an increase of 21.6% beating pre-pandemic spending. In the last week (14 Feb to 20 Feb) the spending in wholesale and retail trade picked up 14.1% YoY. Meanwhile, it is important to note that the value of taxable invoices in accommodation and food in a given week increased threefold – an increase of HRK 198.1m (amounting to HRK 286m) when compared to the same week in 2021. Compared to the same week in 2020, which is considered a pre-pandemic period, taxable invoices in accommodation and food reversed a negative trend and reported a slight increase of 2.5%.

The value of taxable invoices in all segments in the week from 14 Feb to 20 Feb 2022, compared to the week before (7 Feb 2022 to 13 Feb 2022) was up 2.7%, mostly driven by the value in wholesale and retail in the same period which increased by HRK 59.1m and amounted to 60% of the value of all taxable invoices. When looking at the value of taxable invoices in accommodation and food service, it increased slightly by 5.3% compared to the week before.

By the end of January 2022, the NAV of Croatian UCITS funds stood at HRK 21.1bn, an increase of 13.7% YoY and MOM decrease of 2%.

The Croatian Agency for the Supervision of Financial Institutions (HANFA) has published its monthly report on the changes in the financial markets. In it, we can see that the Croatian mutual (UCITS) funds had a total NAV of HRK 21.1bn in January. This represents a decrease of 2% MoM, and an increase of 13.7% YoY. Considering how large of a role these funds play in the Croatian capital market, it is important to have an idea of how well they performed.

The 2% decrease MoM can be attributed to several factors. The main one was the decrease in bond holdings, which declined by -3.1% MoM (or HRK 383.7m), followed by a decrease in the money market, which decreased by -12.1% MoM (or HRK 58.8m). Now this change can be attributed to the perception of rate hikes on bonds. With America’s FED already planning several rate hikes in 2022 to combat inflation, the ECB will also have to address the issue of rising consumer prices in some way. However, considering the lower rate of inflation in the EU (around 5.5%-6% compared to 7.5% in the US), and considering that the inflation in the EU is mainly driven by energy costs, the European Central Banks will surely not raise referent interest rates that much. Still, the uncertainty is there, and the decrease in bond holdings is a result of rising yields and decreasing prices. On the flip side, deposits and cash holdings increased by 2.6% MoM (or HRK 124.8m), holdings in shares increased by 2.8% (or HRK 71.7m), and receivables increased by 681.6% MoM (or HRK 68.3m).

Meanwhile, on a YoY basis, shares had the largest absolute increase, growing by HRK 872.5m (or 49%), followed by investment funds, which increased by HRK 794.7m (or 97%), deposits and cash, which increased by HRK 577.6m (or 13%), and the money market, which grew by HRK 287.8m (or 206%) YoY. At the same time, the only holding which experienced a YoY decrease were the bond holdings, which decreased by HRK 73.5m (or 0.6%) YoY.

Looking over to securities and deposits, both domestic and foreign holdings in this category decreased. Domestic securities and deposits decreased by 1.1% MoM (or HRK 115.9m), while foreign securities decreased by -4% MoM (or HRK 302.8m). This decrease can be indicative of the global sentiment, especially in January when a lot of international companies (especially in the US) experienced decreases due to the uncertainty regarding the aforementioned rate hikes & inflation.

At the same time, the asset structure of the Croatian UCITS funds remains largely unchanged. Bonds still hold the largest share of the assets, with 54.9% of the total. This is a decrease of -1.3 p.p. MoM, and a decrease of -7.6 p.p. YoY. Deposits and cash, which make up 22.9% of the total, have increased by 0.8 p.p. MoM, while remaining at the same level YoY. The 3rd largest asset class, shares, increased by 0.4 p.p. MoM, and 2.9 p.p. YoY. The next asset structure, investment funds, also had the largest relative increase YoY, growing by 3.2%, while remaining at the same level MoM.

Mutual Funds Structure of AUM (January 2022, %)

It should also be noted that domestic equity holdings accounted for 25.7% of total equity holdings, an increase of 29.5% YoY. Meanwhile, foreign equity holdings (which account for the remaining 74.3%) grew by 57.2% YoY. Also, net contributions decreased by HRK 212.1m during the month.

Total assets of all Croatian UCITS funds (2015 – January 2022, EURm)