Economic development of Česká spořitelna from 2008 to 2022.
Prague/Vienna – Last year, the unaudited consolidated net profit of České spořitelna (ČS) rose by 42.2 percent year-on-year to 20.2 billion crowns. According to the bank, this is due to a significantly higher operating result reflecting business growth and overall recovery after the covid-19 pandemic. Operating profit reached 28.5 billion crowns, a year-on-year increase of 30 percent. Česká spořitelna provided consolidated financial results to ČTK in a press release.
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Operating revenues increased year-on-year by 17.8 to 49.9 billion crowns, according to the bank, they were influenced by increasing net interest income, net income from fees and commissions and net profit from business operations.
Net interest income, the most important component of operating income, increased by 18.1 percent compared to 2021 to 36.7 billion crowns. Client loans and deposits grew, the development was also supported by investments in bonds. “Net interest income was also positively affected by the environment of higher interest rates reflected on the side of loans and deposits,” the bank said. Net income from fees and commissions increased year-on-year by 3.5 percent to 9.5 billion crowns and net profit from business operations rose by 115.9 percent to 3.7 billion crowns, which, according to the bank, was due to higher business growth and overall development after the covid-19 pandemic.
“The most significant contribution to revenues was the increase in net interest income in the first half of the year, when the CNB in particular raised interest rates. I expect that net interest income in particular will not grow significantly in the following year due to the current CNB policy setting,” said XTB analyst Tomáš Cverna. The CNB last raised interest rates last June, and has kept them at seven percent ever since.
Total operating costs increased by 4.6 percent year-on-year to 21.3 billion crowns, with staff costs and other administrative costs rising in particular, the bank said.
The consolidated balance sheet amount reached 1.6 trillion crowns at the end of last year, according to the bank, it did not change year-on-year. “The development on the active side of the balance sheet was mainly caused by the growth of loans to clients, which was outweighed by the decrease in loans to banks. The passive side of the balance sheet was affected by deposits from clients together with deposits from banks, which were compensated by the decrease in bonds,” the bank said. The gross volume of client loans increased year-on-year by 9.1 percent to 934.7 billion crowns, and client deposits increased by 6.1 percent to almost 1.3 billion crowns.
Česká spořitelna also reminds in the press release, that last year it signed an agreement to purchase the loan portfolio of Sberbank CZ in liquidation. “Finalization of the transaction is expected during the first half of 2023,” it said.
Česká spořitelna is the largest bank in the Czech Republic by the number of clients, with over 4.5 million. The Austrian financial group Erste Group Bank, which owns Česká spořitelna, is a key player in the banking market of Central and Eastern Europe. That year, net profit rose to 2.16 billion euros (51 billion crowns) from 1.92 billion in 2021.
According to analyst Wood & Company Marty Jezewská-Wasilewská Erste's results exceeded market expectations as net interest income grew in particular. Cverna pointed out that the expected further increase in interest rates by the European Central Bank can support Erste's results this year.
The largest banking houses, including ČS, will pay tax on extraordinary profits in the Czech Republic starting this year. The so-called windfall tax was approved by the government as a 60 percent tax surcharge on excess profits. This corresponds to the difference between the tax base and the average cost of the tax base for the last four years increased by 20 percent. The income from the tax is to be used by the government to cover the extraordinary costs that the state will have in connection with the capping of energy prices.
The six largest banks in the Czech Republic increased their net profit by 30.6 percent last year
The six largest Czech banks earned 76.25 billion crowns last year. Their net profit increased by 30.6 percent year-on-year. According to analysts contacted by ČTK, higher interest rates helped them to improve their performance. The six largest banks are subject to an extraordinary tax, the so-called windfall tax, from the proceeds of which the state wants to cover the costs of introducing ceilings on energy prices.
“(Banks) are benefiting from the environment of higher interest rates, while at the same time they loosened reserves in the first half of the year. It can be said that financial houses maintain good cost discipline despite inflationary pressures,” Cyrrus analyst Tomáš Pfeiler evaluated the results of the largest Czech banks.
“Banks traded on the Prague Stock Exchange, i.e. Moneta, Komerční banka and Austrian Erste, showed robust growth in revenues and net profit,” said XTB analyst Tomáš Cverna. According to him, the growth of net interest income contributed the most to the income. “Despite rising interest rates on mortgages, their volume provided by banks increased,” he added. According to him, the capital adequacy of banks is maintained at a strong level despite the deterioration of the economic situation.
Last year, Česká spořitelna's unaudited consolidated net profit rose by 42.2 percent year-on-year to 20.2 billion crowns. Last year, the net profit of the ČSOB group increased by nine percent to 17.5 billion crowns. Komerční banka's net profit increased by 37.9 percent to 17.6 billion crowns. Czech and Slovak UniCredit Bank posted a net profit of 8.22 billion crowns last year, 21 percent more year-on-year. Raiffeisenbank increased its net profit by 61 percent to 7.54 billion crowns. The profit of Moneta Money Bank increased by 30.2 percent to 5.19 billion crowns.
Starting this year, the largest banking houses in the Czech Republic will pay tax on extraordinary profits. The windfall tax was approved by the government as a 60 percent tax surcharge on excess profits. This corresponds to the difference between the tax base and the average cost of the tax base for the last four years increased by 20 percent. Cverna reminded that Komerční banka and Moneta Money Bank do not expect the tax to have a significant impact on their finances.
The income from the tax is to be used by the government to cover the extraordinary costs that the state will have in connection with the capping of energy prices. In addition to banking, the windfall tax also applies to the energy, petrochemical and mining industries. The tax will be paid in advance, the amount of the advance will be calculated according to last year's profit.
