April 2021 Monthly Report

Published: 21. May 2021.

Overview of supervised entities’ activities in the financial services sector for April 2021

PENSION FUNDS

SECOND PILLAR PENSION FUNDS

In April 2021, mandatory pension funds (MPFs) had 2,068,342 members, i.e. 2,382 more than in the previous month. The majority of new members still do not actively participate in selecting their voluntary pension fund, but are instead assigned to the funds by Regos (3,085 or 94.3% of new members in April 2021). At the same time, termination of membership due to retirement or death was recorded with respect to 891 members.

At the end of April 2021, the average age of members of all MPFs was 40 years, with the average age of members of category A being 26 years, category B 40 years and category C 60 years. Total net contributions paid to mandatory pension funds in April amounted to HRK 613.4 m, slightly decreasing (0.2%) compared to the previous month. At the same time, total payments from all the MPFs due to personal account closures reached HRK 84.3 m, dropping by 14.1% compared to March 2021.

In April 2021, net assets of MPFs increased by 0.7% relative to the previous month and stood at HRK 124.6 bn (33.5% of GDP[1]). Monthly Mirex returns reached 0.6% for category A, 0.3% for category B and - 0.1% for category C. Annual returns of Mirex indices ranged from 2.3% for category C to 14.5% for category A, primarily reflecting the effect of the low base value of units in April 2020, but partly reflecting the continued trend of unit value recovery in 2021. Annualised Mirex index returns since the beginning of mandatory pension funds’ operation reached 7.4% for Mirex A, 5.5% for Mirex B and 5.0% for Mirex C at the end of April.

Bond investments of MPFs reached HRK 80.3 bn (64.4% of total assets) at the end of April, which was 0.5% less than in March. At the same time, investments in shares increased by 2.4% and amounted to HRK 24.6 bn (19.8% of mandatory pension funds’ assets) at the end of April 2021. Investments in domestic shares accounted for 11.1%, while investments in foreign shares accounted for 8.7% of mandatory pension funds’ assets. As regards other investment types, the most common were investments in investment funds amounting to HRK 12.7 bn (10.2% of assets), increasing by 0.4% on a monthly level, while investments in money and deposits reached HRK 5.8 bn (4.7% of assets), increasing by 12.1% relative to the previous month. Since the beginning of the year, there has been an increase in mandatory pension funds’ investments in stocks (+11.8%) and investment funds (+28.9%), as well as an increase in funds allocated to highly liquid forms of assets, i.e. money and deposits (+32.3%). At the same time, investments in bonds have decreased by 1.1% since the beginning of the year.

THIRD PILLAR PENSION FUNDS

At the end of April 2021, 8 open-ended voluntary pension funds (OVPFs) had a total of 338,336 members, an increase of 0.6% on a monthly basis. The number of members of 20 closed voluntary pension funds (CVPFs) remained relatively unchanged, with CVPFs having 44,750 members at the end of April 2021.

Total monthly payments made to voluntary pension funds (VPFs) in April amounted to HRK 61.3 m, increasing by 9.5% compared to March. At the same time, total monthly payments from these funds amounted to HRK 24 m, a 19.2% decrease compared to the previous month. Most of the payments from funds were lump-sum cash payments amounting to HRK 6.8 m (28.2% of total payments in April 2021), an additional HRK 5.2 m were paid out through the pension company (fund) (21.5%), while HRK 4.9 m were transferred to pension insurance companies (20.3%). Other payments, reaching HRK 7.2 m (30.1%), were related to payments in the event of death, payments due to the change of fund and payments due to other reasons.

Net assets of voluntary pension funds grew by 0.5%, reaching HRK 7 bn, with monthly returns of funds ranging between -0.5% and 0.8%. Annual rates of return ranged from 1.8% to 14.7%. Voluntary pension funds’ investment structure was similar to that of mandatory pension funds and did not change significantly relative to the previous month. The largest part of the portfolio is still made up by bonds with the share of 57.6% in total assets, followed by shares with 25.5% and investment funds with 11.1%.

PENSION INSURANCE COMPANIES (PIC)

In August 2020, along with the existing Raiffeisen Pension Insurance Company, Hrvatsko mirovinsko osiguravajuće društvo (Croatian Pension Insurance Company), established by the Croatian Pension Insurance Institute (HZMO), commenced its operations. At the end of the first quarter of 2021, the two pension insurance companies counted 11,237 beneficiaries and 11,350 contracts approximately equally distributed in mandatory and voluntary pension insurance. Relative to the first quarter of 2020, this is an increase of 1,834 contracts (+19.3%). Total assets of pension insurance companies reached HRK 1.5 bn, an increase of 67% relative to the first quarter of the previous year. The greatest contribution to this, along with the establishment of the new PIC, is the value of the investment, which increased by 63.3% and accounts for 92.0% of the assets. Total profit of pension insurance companies stood at HRK 1.9 m, which is by 50.7% less than in the first quarter of 2020, as a result of a 30.9% decrease in income from investments and a 27.9% increase in expenses arising from pension contracts.

The structure of technical provisions by type of pension scheme is dominated by provisions for individual life old-age pension amounting to HRK 904.1 m with a 71.4% share in total provisions, followed by provisions for joint life pensions in the amount of HRK 18.3 m (share of 14.3%) and provisions for temporary pension in the amount of HRK 169.8 m (13.4% share in total provisions).

INSURANCE COMPANIES

In April 2021, there were 15 insurance companies operating on the market. Total gross written premium for the first four months of 2021 amounted to HRK 4.3 bn, of which HRK 1.1 bn related to life insurance premium and HRK 3.2 bn to non-life insurance premium. On the annual level, both types of premium increased by 10.4%. The gross amount of claims settled totalled HRK 2.4 bn, increasing by 6.8% on an annual basis. HRK 1.0 bn of this amount relates to life insurance, while HRK 1.4 bn relates to non-life insurance.

CAPITAL MARKET

The total turnover on the Zagreb Stock Exchange reached HRK 172.7 m in April 2021, declining by 2.9% compared with the previous month. Although trading in shares decreased by 14.6%, the increase in trading in other classes of securities (bonds by HRK 30 m and ETFs by HRK 2.5 m) contributed to total traffic keeping a positive sign compared to the previous month. The order book turnover recorded a monthly increase of 9.3%, while the OTC market turnover decreased by 65.3%. Market capitalisation decreased on the monthly level by 0.2%, and stood at HRK 276.5 bn (74.4% of GDP) at the end of April. As for stock indices, the largest monthly rise was recorded by CROBEXindustrija (5.2%) and CROBEXplus (2.5%), while the value of CROBEXprime, CROBEXkonstrukt and CROBEXtransport decreased slightly. HT stock was most traded in April, with its turnover amounting to almost HRK 13.5 m (11.9% of overall trade in stocks) and a monthly decrease in price of 0.5%. In April, the bonds of the City of Varaždin were admitted to trading at the Zagreb Stock Exchange, as the first municipal bonds listed after 2008.

INVESTMENT FIRMS

In the first quarter of 2021, there were 27 legal entities authorised to provide investment services, i.e. 7 investment firms, 13 credit institutions and 7 investment fund management companies. In comparison with the previous quarter, the value of assets managed by credit institutions increased the most (2.3%), followed by investment fund management companies (0.1%), while the value of assets managed by investment firms decreased by 22.6%. The trend of growth of assets under custody of investment firms that started in 2019 continued in the first quarter of this year (55.7% compared to the previous quarter, i.e. 169% compared to the same period of the previous year). In the first quarter of 2021, HRK 1.94 bn of financial instruments were distributed (an increase of 36.3% compared to the previous quarter), 89.3% of which are units of domestic UCITS.

INVESTMENT FUNDS

In April 2021, there were 92 UCITS operating on the market (one more that in March, while 3 UCITS are undergoing winding up-proceedings). Total net assets of UCITS amounted to HRK 19.7 bn at the end of April, growing by 1.9% compared to the previous month. Positive net payments to all categories of funds contributed to this (total value of net payments of all UCITS amounted to HRK 379.4 m), as well as positive market trends in the value of their assets, primarily stock investments. Thus, in April 2021, the highest asset-weighted average monthly yield of 2.49% was generated by equity funds. Monthly yields of feeder, balanced and other funds ranged between 0.4% and 0.6%. Only monthly yield of bond funds was slightly negative (-0.07%). Net assets of bond funds at the end of April 2021 accounted for 75.3% of the total net assets of all UCITS, while equity and balanced funds accounted for 9.8% and 5.7% of the total net assets of UCITS, respectively.

Assets of the Fund for Croatian Homeland War Veterans and Members of their Families amounted to HRK 1.0 bn at the end of April, a slight monthly fall of 0.8%.

LEASING COMPANIES

The total assets of 15 leasing companies at the end of the first quarter of 2021 stood at HRK 19.7 bn, a decrease of 10.7% on an annual level. Comprehensive income of leasing companies was by 69.9% higher than in the first quarter of the previous year, amounting to HRK 55.4 m.

The outstanding contract value of active contracts continued to decrease, and during the first quarter of 2021, it decreased by 8.7% on the annual level in the operating lease segment, i.e. by 4.8% in the financial lease segment.

However, at the same time, the value of newly concluded operating leasing contracts increased by 8.2%, while the trend of decrease in the value of newly concluded finance lease contracts continued (1.1% on an annual basis).

The full report is available at Publications/Monthly reports

[1] Nominal value of gross domestic product in 2020 amounted to HRK 371.5 bn.