In 2020, ZABA recorded a decrease in net banking income of 12.1% and a decrease in net profit to majority of 42.9%

In 2020 ZABA’s net interest income amounted to HRK 3.07bn, representing a decrease of 11.2%, or HRK 386m. The company attributes such a high decrease mostly to a continued pressure on NIM. Net fee and commission income stood at HRK 1.27bn, representing a decrease of HRK 116m or 8.4%.

Meanwhile, net banking income stood at HRK 4.54bn, representing a decrease of 12.1%. Within the net banking income, ZABA noted a decrease in gain on financial assets held for trading of 54.6% or HRK 205.8m. Meanwhile, the bank recorded a loss on financial assets measured at fair value through P&L of HRK -98.2m, compared to HRK 166.4m in 2019.

Operating expenses amounted to HRK 2.2bn, representing a decrease of 2.8% or HRK 63m. Such a decrease was due to lower administration costs and depreciation.

Looking at value adjustments and provisions for losses, they amounted to HRK 1,148m, which were observed due to the growth of credit risk following the COVID-19 pandemic. As a result, the bank recorded a sharp decrease in net profit to majority of 42.9%, to HRK 1bn.

Turning our attention to the balance sheet, total assets amounted to HRK 149.85bn, representing an increase of 2.9% YoY. Of that, loans to customers account for 54.6% or HRK 81.83bn, representing a decrease of 1.5bn or 2% YoY. Such a decrease could be attributed to slowed credit activity during the pandemic. On the flip side, deposits from customers amounted to HRK 117.21bn, representing an increase of 3.4%, in line with banking trends in the region. Such a result puts the L/D ratio at 69.4%.

In 2020, the company recorded an increase in sales of 13.7%, flat EBITDA and a decrease in net profit of 7.7%.

Ericsson Nikola Tesla (ERNT) had a good year considering the impact of the COVID-19 pandemic and the numerous earthquakes which hit Croatia. Sales revenue for 2020 amounted to HRK 2,023m, indicating a 13.7% climb compared to 2019 (HRK 1,779m), primarily as a result of increases in digital and managed services. Sales revenue generated from the domestic market increased dramatically (86.5%) compared to 2019, amounting to HRK 926.7m in 2020. The domestic side of operations has seen improvements with the signing of a new contract with long-term strategic partner HT as well as partnering up with A1 and HT to become the exclusive supplier of 5G in the radio part of the mobile network until 2024. Majority of revenue is derived from exports which make up for 54.2.% of overall revenue. The export market has seen lower YOY sales revenue due to the pandemic as well as the economic and political issues facing the countries of operation. The news is not all bad as ERNT has signed a new contract in Belarus for the implementation of a centralized platform for the public healthcare system.

The expenses excluding amortization increased by 13.9% YOY leading to a virtually unchanged EBITDA as the increased expenses were compensated with the increased revenues, making the overall change in EBITDA flat. Growth was mainly led by the rise in material costs, as well as staff costs due to employment of an additional 204 experts with backgrounds in STEM. However, higher increase in expenses (+13.9%) than in revenues (+13.7%) have resulted in a decrease of the EBITDA margin from 8.9% in 2019 to 7.8% in 2020. Now including amortization, expenses increased by 14.4% to HRK 1,942m. Furthermore, lower gain from financial activities (HRK 2.2m compared to HRK 5.7m in 2019) due to negative exchange differences and therefore unfavorably impacting net profit. Net profit in 2020 amounted to HRK 94.5m indicating a decline of 7.7% with respect to 2019 (HRK 102.5m).

Total assets increased by 4.1% to HRK 994.3m primarily due to dramatically higher cash reserves (HRK 281.1m in 2020 vs HRK 97.9m in 2019) as a result of expedited collection of customer receivables as well as the lightening of inventory due to having completed the works in progress. The same reasons caused cash flow from operating activities to increase by 347% to HRK 308.1m in 2020 compared to HRK 69.0m in 2019.

Having covered the quantitative highlights, it is also important to mention other exciting and insightful news of the company. Ericsson has completed the “Improvement in energy efficiency and use of renewable energy sources in Ericsson Nikola Tesla d.d.“ project, which is one of the largest projects of its kind in Croatia. The completed project enables the company to save 4.6 million kWh annually as well as reduce carbon dioxide emissions by 1,400 tons. Furthermore, ERNT signed an agreement with HT to be their exclusive supplier of microwave transport technology until 2024. Observing the export market, they have been working with HT Eronet to ameliorate the LTE network in Bosnia and Herzegovina and have continued their cooperation with Crnogorski Telekom and IPKO in the modernization and maintenance of telecom networks in their respective countries. Towards the end of 2020, Zagreb Stock Exchange presented ERNT the award of having the largest increase in share price as well as having the share with the largest increase in turnover in 2020.