“We are pleased with our YE2019 results. A total of HRK 5.6 billion of new loans were approved in the retail segment. Housing loans have a higher growth rate, their portfolio having grown by about 10%. At the same time, the growth of the cash loans portfolio has slowed down to about 4%, partially due to the alignment with the recommendations of the Croatian National Bank. The corporate sector saw a healthy growth too. A total of HRK 7.7 billion worth of loans was approved to businesses, with small and medium-sized companies accounting for 60% of this amount”, said Christoph Schoefboeck, Chairman of the Management Board of Erste Bank Croatia, commenting on the business results for 2019 and added: “We are pleased about the fact that the accuracy and long-term sustainability of our business model has been confirmed with the BBB+ rating with stable outlook, which we were granted by Fitch, one of the most renowned credit rating companies in the world. The Bank’s credit rating is above the current rating of the Republic of Croatia, and we are especially proud of the fact that it also represents the highest grade that any bank on the Croatian market has.”
In brief
According to the non-consolidated financial report for Erste Bank Croatia (the Bank), without subsidiaries, the Bank’s net profit in 2019 was HRK 752.5 million, down 9.3% from HRK 829.7 million in the last year. One-time provision costs, which arose from a litigation case which is still ongoing and was filed by a creditor of one of the contracting parties in a deposit contract, had the most significant impact on the net profit decrease.
Net interest income decreased by 2.3%, from HRK 1,651.9 million in 2018 to HRK 1,613.5 million in 2019, primarily as a result of further interest margin reduction. Net fee and commission income was up 8.5%, primarily led by upward trends in the transaction banking segment, and in 2019 it reached HRK 504.4 million in comparison with HRK 464.9 million in 2018. Net trading and fair value result increased by 12.1%, from HRK 203.6 million in 2018 to HRK 228.1 million in 2019, boosted by upward trends of the foreign exchange transactions.
At the end of December 2019 the Bank’s total assets were HRK 63.9 billion, up 4.1% from HRK 61.4 billion at 2018YE. As of 31/12/2019, total loans were HRK 41.1 billion, up 3.3% from HRK 39.8 billion at 2018YE. Total deposits as of 31/12/2019 were HRK 48.5 billion, up 3.1% from HRK 47.0 billion at 2018YE.
EBC Group’s* net profit before minority interests in 2019 was HRK 982.3 million, down 4.7% compared to HRK 1,030.6 million in 2018. EBC Group’s net interest income was down 1.3%, from HRK 2,073.1 million in 2018 to HRK 2,046.9 million in 2019. Net fee and commission income was up 9.5%, from HRK 733.4 million in 2018 to HRK 802.8 million in 2019.
EBC Group’s total assets in late December 2019 were HRK 73.9 billion and were up 6.0% from HRK 69.7 billion at 2018YE. Total loans as of 31/12/2019 were HRK 45.3 billion, up 4.9% from HRK 43.2 billion at 2018YE. EBC Group’s total deposits at the end of December 2019 were HRK 51.3 billion and were up 4.3% from HRK 49.2 billion at 2018YE.
Outlook
“Even though it is difficult to talk about more concrete indicators at the moment, it is realistic to expect that the current coronavirus situation will have certain implications on the business environment and the expected growth rates of the Croatian economy in 2020. And this is why we welcome the efforts invested by the Government of the Republic of Croatia and Croatian National Bank with the aim of ensuring and maintaining the liquidity within the system, as well as to preseve jobs. We will also make a maximum contribution on our part so that our clients, citizens and companies would be as least possible affected by the current circumstances and, especially when it comes to companies, that they would maintain the continuity of their business operations. Apart from that, it is important to emphazise that we will further support all quality and sustainable projects, especially those from real sector, as well as the needs of the citizens,” Schoefboeck underlined.
“In the current changed circumstances, caused by the global coronavirus pandemic, a comprehensive digital transformation of the banking business, as a process which has been on-going for quite a while, is getting a new broader dimension and is focussing on the development and the need for digital channels to a greater extent. As a bank, we have already earlier, in the light of the PSD2 regulation enforcement, proactively approached the digital solution development within the so-called open banking segment. A very successful example is the KeksPay app, which primarily enables users to send and receive money free of charge. Since the launch, the app reported some 110,000 users, 75% of which are not clients of Erste Bank. In the upcoming development, our strategy will focus on further improvements and innovations in that segment, with a strong focus on providing a comprehensive advisory service to clients and caring about their prosperity,” Schoefboeck concluded.