Zagreb, 18 March 2024 – "We are satisfied with the results achieved in the past year, which was marked by positive trends in all segments of our business, further growth of our market shares, as well as the continuation of quality partnership with clients, which is reflected in very high ratings of their customer experience. Credit activity remained overall solid - against the international trend - especially in the retail segment showing healthy lending growth in 2023, while corporate lending segment delivered lower growth compared to the record year 2022, while still remaining on a solid single digit growth path overall”, said Christoph Schoefboeck, President of the Management Board of Erste Bank Croatia ("the Bank"), commenting on the business results achieved in 2023. “A major challenge was the trend of rising interest rates in the eurozone, as a consequence of the European Central Bank’s (“ECB”) policy in order to fight inflation. Due to the very competitive landscape in Croatia, along with the positive euro adoption effects and generally high level of banking system liquidity, the overall monetary transmission was rather moderate, especially compared to markets outside the eurozone. Such moderate interest rates increase positioned Croatia among those EU countries with relatively low cost of financing, placing Croatia high on the ranking list of countries with favorable lending conditions”, Schoefboeck added.
IN BRIEF
According to an unconsolidated financial report, which includes the results of the Bank excluding subsidiaries, the net profit in 2023 amounted to EUR 219 million, compared to EUR 130 million in 2022. Higher net profit was the result of the improved operating result which primarily stemmed from increased interest income as a consequence of the monetary policy-maker's actions and the growth of the market interest rates, as well as the total loans volume increase. As a result, net interest income increased from EUR 232 million in 2022 to EUR 353 million in in 2023, while net fee and commission income increased from EUR 79 million in 2022 to EUR 87 million in 2023. Net trading and fair value result expectedly declined with the introduction of the euro, amounting to EUR 14 million in 2023, compared to EUR 41 million in 2022.
The Bank's total assets at the end of December 2023 amounted to EUR 13.3 billion, down by 2.7% compared to the end of 2022 when they amounted to EUR 13.6 billion. Total loans to customers as of 31 December 2023 amounted to EUR 7.8 billion, up 9.2% compared to the EUR 7.1 billion at the end of 2022. Total deposits of the Bank's customers as of 31 December 2023 amounted to EUR 10.8 billion, up 1% compared to the end of 2022 when they amounted to EUR 10.7 billion. The decrease in deposits in the first half of 2023, that was primarily the result of the expected and anticipated partial shifting of deposits into alternative forms of investing, predominantly into the so-called national bonds and the Bank's bond issue as well as, partially, into the so-called fixed maturity investement funds, was fully compensated by the growth in the second half of the previous year.
EBC Group's[1] net profit after minority interests amounted to EUR 241 million in 2023, compared to EUR 156 million in 2022. ECB Group's net interest income amounted to EUR 410 million, compared to EUR 282 million in 2022. Net fee and commission income amounted to EUR 125 million, compared to EUR 117 million in 2022. Net trading and fair value result amounted to EUR 15 million in 2023, compared to EUR 40 million in 2022.
EBC Group’s total assets at the end of December 2023 amounted to EUR 14.8 billion, down 1.5% compared to the end of 2022 when they amounted to EUR 15.0 billion. Total loans to customers as of 31 December 2023 amounted to EUR 8.5 billion, 9.1% more compared to the end of 2022 when they amounted to EUR 7.7 billion. Total deposits of EBC Group's customers as of 31 December 2023 amounted to EUR 11.4 billion, 1.8% more compared to the end of 2022 when they amounted to EUR 11.2 billion.
[1] EBC Group’s consolidated financial statement includes the following subsidiaries in addition to Erste Bank Croatia: Erste Nekretnine d.o.o., Erste&Steiermärkische S-Leasing d.o.o, Erste Bank a.d., Podgorica, Erste Card Club, Erste Group IT HR d.o.o. and Izbor Nekretnina d.o.o.
IN BRIEF
According to an unconsolidated financial report, which includes the results of the Bank excluding subsidiaries, the net profit in 2023 amounted to EUR 219 million, compared to EUR 130 million in 2022. Higher net profit was the result of the improved operating result which primarily stemmed from increased interest income as a consequence of the monetary policy-maker's actions and the growth of the market interest rates, as well as the total loans volume increase. As a result, net interest income increased from EUR 232 million in 2022 to EUR 353 million in in 2023, while net fee and commission income increased from EUR 79 million in 2022 to EUR 87 million in 2023. Net trading and fair value result expectedly declined with the introduction of the euro, amounting to EUR 14 million in 2023, compared to EUR 41 million in 2022.
The Bank's total assets at the end of December 2023 amounted to EUR 13.3 billion, down by 2.7% compared to the end of 2022 when they amounted to EUR 13.6 billion. Total loans to customers as of 31 December 2023 amounted to EUR 7.8 billion, up 9.2% compared to the EUR 7.1 billion at the end of 2022. Total deposits of the Bank's customers as of 31 December 2023 amounted to EUR 10.8 billion, up 1% compared to the end of 2022 when they amounted to EUR 10.7 billion. The decrease in deposits in the first half of 2023, that was primarily the result of the expected and anticipated partial shifting of deposits into alternative forms of investing, predominantly into the so-called national bonds and the Bank's bond issue as well as, partially, into the so-called fixed maturity investement funds, was fully compensated by the growth in the second half of the previous year.
EBC Group's[1] net profit after minority interests amounted to EUR 241 million in 2023, compared to EUR 156 million in 2022. ECB Group's net interest income amounted to EUR 410 million, compared to EUR 282 million in 2022. Net fee and commission income amounted to EUR 125 million, compared to EUR 117 million in 2022. Net trading and fair value result amounted to EUR 15 million in 2023, compared to EUR 40 million in 2022.
EBC Group’s total assets at the end of December 2023 amounted to EUR 14.8 billion, down 1.5% compared to the end of 2022 when they amounted to EUR 15.0 billion. Total loans to customers as of 31 December 2023 amounted to EUR 8.5 billion, 9.1% more compared to the end of 2022 when they amounted to EUR 7.7 billion. Total deposits of EBC Group's customers as of 31 December 2023 amounted to EUR 11.4 billion, 1.8% more compared to the end of 2022 when they amounted to EUR 11.2 billion.
[1] EBC Group’s consolidated financial statement includes the following subsidiaries in addition to Erste Bank Croatia: Erste Nekretnine d.o.o., Erste&Steiermärkische S-Leasing d.o.o, Erste Bank a.d., Podgorica, Erste Card Club, Erste Group IT HR d.o.o. and Izbor Nekretnina d.o.o.
GROWTH OF DIGITAL CHANNELS
The Bank's digital solutions continued their continious and stabile upward trend in 2023. The total number of active users of George online banking at the end of 2023 was around 410,000, up 13% compared to the end of 2022 when there were around 362,000 users. At the same time, the total volume of transactions in 2023 amounted to around EUR 5.3 billion, up 32% compared to the same period last year. The number of KEKS Pay users reached 411,000 at the end of 2023, up 29% compared to the 318,000 users at the end of 2022. The total volume of transactions made using KEKS Pay amounted to EUR 150 million in 2023, almost 76.5% up compared to the year before.
CONTRIBUTION TO THE GROWTH AND DEVELOPMENT OF THE DOMESTIC CAPITAL MARKET
By issuing the so-called "preferred senior" bond in June last year, in the total value of EUR 90.1 million, the bank has once again confirmed its position as the most active bond issuer among financial institutions in Croatia. In addition to issuing its own bond, the bank, as one of the leading agents, also participated in the two issues of the Republic of Croatia bonds on the domestic capital market, in March and November 2023. The bond issued in March was for the first time ever offered to retail investors through the network of branches of the banks involved. In addition, in late June and early July 2023, as one of the agents, the Bank also participated in the successful issue of the ZG Holding bond, amounting to a total of EUR 305 million, thus continuing to provide additional support to the development of the domestic capital market overall.
DOWNWARD TREND OF NPLs
Last year was also characterized by the continued downward trend of so-called NPLs (non-performing loans). As a result, the Bank's share of NPLs was 2.9% at the YE2023, compared to 3.4% at the end of December 2022. At the consolidated level of the ECB Group, the share of NPLs at the end of 2023 was 3.0%, compared to 3.6% at the end of 2022.
GROWTH OF DIGITAL CHANNELS
The Bank's digital solutions continued their continious and stabile upward trend in 2023. The total number of active users of George online banking at the end of 2023 was around 410,000, up 13% compared to the end of 2022 when there were around 362,000 users. At the same time, the total volume of transactions in 2023 amounted to around EUR 5.3 billion, up 32% compared to the same period last year. The number of KEKS Pay users reached 411,000 at the end of 2023, up 29% compared to the 318,000 users at the end of 2022. The total volume of transactions made using KEKS Pay amounted to EUR 150 million in 2023, almost 76.5% up compared to the year before.
CONTRIBUTION TO THE GROWTH AND DEVELOPMENT OF THE DOMESTIC CAPITAL MARKET
By issuing the so-called "preferred senior" bond in June last year, in the total value of EUR 90.1 million, the bank has once again confirmed its position as the most active bond issuer among financial institutions in Croatia. In addition to issuing its own bond, the bank, as one of the leading agents, also participated in the two issues of the Republic of Croatia bonds on the domestic capital market, in March and November 2023. The bond issued in March was for the first time ever offered to retail investors through the network of branches of the banks involved. In addition, in late June and early July 2023, as one of the agents, the Bank also participated in the successful issue of the ZG Holding bond, amounting to a total of EUR 305 million, thus continuing to provide additional support to the development of the domestic capital market overall.
DOWNWARD TREND OF NPLs
Last year was also characterized by the continued downward trend of so-called NPLs (non-performing loans). As a result, the Bank's share of NPLs was 2.9% at the YE2023, compared to 3.4% at the end of December 2022. At the consolidated level of the ECB Group, the share of NPLs at the end of 2023 was 3.0%, compared to 3.6% at the end of 2022.
OUTLOOK
“When considering 2024, we remain optimistic. The domestic component of growth remains supported by a strong labour market and the growth of citizens' real incomes, and on the investment side, we continue to witness the considerable potential of EU funds in the coming period. The export component of growth will predominantly reflect the aforementioned economic trends in the EU, which we currently see as the main unknown factor, i.e., the main risk in 2024. Following the normalization after the pandemic, we still see tourism as an important factor of growth, but likely to a smaller degree. In short, after a growth rate of 2.8% in 2023, we expect similar dynamics in 2024 and a growth rate of around 3%, where the current economic momentum even suggests the possibility of somewhat stronger economic growth this year", Schoefboeck pointed out.
"Despite the fact that this is an election year, structural reforms should not stall or slow down, instead, it is necessary to further stimulate their dynamic pace. Despite everything, Croatia still occupies only an average place on rankings of competitiveness, such as the Doing Business ranking, and there is certainly room for improvement in that regard. This will become especially important as financing from European funds will gradually slow down towards the end of the decade. This is, of course, a long-term process, which must not be postponed any longer. Additionally, we must not forget the need to further strengthen legal security for domestic and foreign investors," Schoefboeck continued.
"In general, EBC's position on the Croatian market is solid and stable. We hold a leading position in many business segments, have the highest rating from credit rating agencies (A-, Fitch Ratings, 2023) among banks and other companies on the domestic market, and we have also won our ninth Golden Kuna award for the most successful Croatian bank. A strong and stable capital position, high level of liquidity, high degree of client trust, and the fact that we belong to a strong parent group that sees CEE region as its core market, puts the focus of our business operations on efficiency, innovation and striving for excellence, through which we want to contribute to the growth and development of the Croatian economy, encouraging and promoting the prosperity of all of our employees, clients and Croatian society as a whole," concluded Schoefboeck on this occasion.
Statement of Profit and Loss as of 31 December 2023
Statement of Financial Position as at 31 December 2023