“We achieved very strong business results in the first half of the year, once again confirming our strong and stable position in the Croatian banking market. We recorded a healthy impulse of new lending in the retail and corporate sectors, with mild growth of our total lending portfolio, thus continuing to support Croatian citizens and companies in the fulfilment of their financial needs. George online banking and KEKS Pay have continued to grow, making the digital strategy a recognisable factor of our business model and our overall strategy of long-term sustainable successful performance”, said Christoph Schoefboeck, President of the Management Board of Erste&Steiermärkische Bank d.d. (“Bank”), commenting on the Bank’s performance in H1 2024. “By issuing our green bond, we further confirmed our position as the most active non-government bond issuer in Croatia, with continual emphasis on the implementation of ESG criteria in our regular operations. We have a strong capital position and a high level of liquidity, as well as the highest rating from rating agencies (A-, Fitch Ratings, 2023) among banks and other companies in the Croatian market. This guarantees our continued strong performance for the remainder of the year, by which we wish to justify the high level of trust our clients have shown us, and continue to provide an adequate impulse for further growth and development of the Croatian economy in general”, Schoefboeck added. “Finally, I would like to thank Zdenko Matak, who has served as a Member of the Management Board until now, for his exceptional contribution to the Bank’s successful performance over the past decade, and to welcome our new Member of the Management Board Katarina Kraljević, wishing her lots of luck and success in her new position. I have full confidence that her knowledge, expertise, energy and clear vision will aid her in continuing to successfully position the bank in the retail sector, and develop our digital strategy”, he concluded.
HIGHLIGHTS
According to the unconsolidated financial statement, comprising the Bank’s results without subsidiaries, net profit in H1 2024 amounted to EUR 119 million and was the same as in H1 2023. This level of net profit was positively impacted by the increased revenue from regular business operations, increased volume of new lending, increase in payment transactions, positive trends in the risk costs segment, and, partly, the increase in market interest rates. At the same time, the cost component also recorded growth, mainly as a result of the growth of interest rates on deposits and to a minor extent also as a result of the growth of personnel expenses, the growth of other administrative expenses, and the one-off effect of the additional corporate income tax for 2022.
Net interest income increased by 11.0%, from EUR 164 million in H1 2023 to EUR 182 million in H1 2024, and net fee and commission income increased by 15.0%, from EUR 40 million in H1 2023 to EUR 46 million in H1 2024. Net trading and fair value result in H1 2024 amounted to EUR 8 million and remained unchanged year-on-year.
The Bank’s total assets at the end of June 2024 amounted to EUR 13.2 billion and were down 0.8% compared to the end of 2023, when they amounted to EUR 13.3 billion. Loans to customers as at 30 June 2024 amounted to EUR 8.2 billion and were up 5.1% compared to EUR 7.8 billion at the end of 2023. Deposits of the Bank’s clients as at 30 June 2024 amounted to EUR 10.4 billion and were down 3.7% compared to the end of 2023, when they amounted to EUR 10.8 billion. The decrease in deposits in H1 2024 is the result of the expected and anticipated partial shifting of retail deposits into alternative forms of investing available on the market, dominantly into treasury bills issued by the Ministry of Finance of the Republic of Croatia, as well as investment funds of Erste Asset Management d.o.o.
EBC Group’s net profit1 after minority interests in H1 2024 amounted to EUR 131 million, up 1.6% compared to EUR 129 million in H1 2023. EBC Group’s net interest income amounted to EUR 213 million, up 10.9% compared to EUR 192 million in H1 2023. Net fee and commission income amounted to EUR 64 million, up 10.3% compared to EUR 58 million in H1 2023. Net trading and fair value result in H1 2024 amounted to EUR 8 million and remained unchanged year-on-year.
ECB Group’s total assets at the end of June 2024 amounted to EUR 14.83 billion and were up 0.5% compared to the end of 2023, when they amounted to EUR 14.75 billion. Loans to customers as at 30 June 2024 amounted to EUR 8.9 billion and were up 4.7% compared to the end of 2023, when they amounted to EUR 8.5 billion. Deposits of EBC Group’s customers as at 30 June 2024 amounted to EUR 11.0 billion and were down 3.5% compared to the end of 2023, when they amounted to EUR 11.4 billion.
1 EBC Group’s consolidated financial statement includes the following subsidiaries in addition to Erste&Steiermärkische Bank d.d.: Erste Nekretnine d.o.o., Erste&Steiermärkische S-Leasing d.o.o, Erste Bank a.d., Podgorica, Erste Card Club and Izbor Nekretnina d.o.o.
Digital channels maintain growth continuity
The Bank’s digital solutions continued the trend of continuous and stable growth in H1 2024. At the end of June 2024, the total number of active users of George online banking was 442,500 and was up 8% compared to the end of 2023, when George had had 410,000 active users. At the same time, total transaction volume in H1 2024 amounted to EUR 3.4 billion and was up 17% year-on-year. At the end of June 2024, the number of users of the KEKS Pay app reached 456,000, up almost 10% compared to 410,000 at the end of 2023. Total transaction volume carried out on KEKS Pay in H1 2024 was EUR 103 million and was up 62% compared to the same period last year.
NPLs continue the downward trend
The downward trend regarding so called NPLs (non-performing loans or partly performing loans) continued in H1 2024. At the end of June 2024, their ratio at Bank level amounted to 2.6% compared to 2.9% at the end of December 2023. At consolidated EBC Group level, NPL ratio at the end of June 2024 amounted to 2.7% compared to 3.0% at the end of 2023.
Green bond issue
In January 2024, the Bank issued the inaugural so-called green preferred senior bond on the international capital market, in the total amount of EUR 400 million. The bond was issued in a green format under the so-called Erste Group Sustainable Finance Framework and is the first green bond issued by any issuer in the Republic of Croatia. This issue was realised in order to fulfil the so-called MREL requirement (Minimum requirement for own funds and eligible liabilities), as an integral part of the EU regulatory framework, and the funds raised will help further improve the diversification of the Bank’s funding sources, while being used to promote green and sustainable investments and projects. This is the eighth issue of Erste Bank bonds in the domestic and international capital markets, with which the Bank has once again confirmed its position as the most active non-government bond issuer in Croatia.
Katarina Kraljević joins the Management Board as a new Member as of 1 August
As we have announced earlier, Katarina Kraljević, who previously served as Retail Banking Development Director, took over as the Member of the Bank’s Management Board responsible for Retail, Retail Banking Development, Direct Channels and Digital Banking as of 1 August 2024. Zdenko Matak, who held the position of the Member of the Management Board so far, decided to step down from the position at the end of his term on 31 July, and will act as the advisor to the Management Board for retail banking in the future. Katarina Kraljević holds a master's degree in economic sciences and has many years of experience working in the banking sector. She started her career in 2001 as a financial advisor for retail clients at Bank Austria Creditanstalt d.d. Zagreb. Between 2002 and 2005, she was a relationship manager for SME clients at Centar banka d.d., after which she transferred to EBC to the position of Risk Manager for Micro companies and private individuals. From 2008 to 2015, she was head of the Retail and Micros Risk Management Department, and from 2015 to 2017 she was Deputy Director of Retail Division. She has held the position of the head of Retail Business Banking Development Division since January 2018.
Statement of Profit and Loss for the period from 1 January to 30 June 2024
Statement of Financial Position as at 30 June 2024