July 2021 Monthly Report

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

PENSION FUNDS

SECOND PILLAR PENSION FUNDS

At the end of July 2021, mandatory pension funds (MPFs) had 5,783 members (0.28%) more than in the previous month, which made the total number of their member reach 2,078,399. The largest share of a total of 7,029 new members (97.2%) were assigned by Regos automatically. In the last year, the average monthly membership growth rate for category A MPFs amounted to 6.4%, for category C MPFs to 1.6%, while the rate for category B MPFs was still mildly negative (-0.1%). In July 2021, termination of membership due to retirement or death was recorded with respect to 1,246 members. Total net contributions paid to MPFs in that month reached HRK 634.42m, while the amount totalling HRK 4.2bn has been paid to MPFs since the beginning of the year, HRK 429.5m (11.3%) more than in the same period last year. Total payments from all the mandatory pension funds due to personal account closures in July reached HRK 186.7m. Total payments from MPFs since the beginning of the year totalled HRK 1.05bn, a HRK 296.2m or 39.4% rise compared with the same period last year.

At the end of July 2021, net assets of MPFs increased by 0.9% on a monthly basis and stood at HRK 127.6bn. Monthly Mirex returns stood at 0.8% for category A, at 0.6% for category B and at 0.3% for category C, continuing their unit value recovery trend in 2021. Year-to-date Mirex returns reached 0.3% for category C, 4.7% for category B and 8.5% for category A, while annualised returns since the beginning of MPFs’ operation reached 7.6% for Mirex A, 5.5% for Mirex B and 4.8% for Mirex C.

At the end of July, bond investments of MPFs totalled HRK 81.2bn (64.3% of the total assets), making their share increase by 2.5 p.p. on a monthly basis. In the same period, the share of equity investments in the assets of MPFs rose by 1.8 p.p, amounting to HRK 25.8bn or 20.2% of MPFs’ assets and reaching the highest level of equity investments since mid-2014. Investments in domestic shares accounted for 11.2%, while investments in foreign shares, which have been rising for the last nine months, accounted for 9.0% of MPFs’ total assets. Broken down by categories, the share MPFs’ assets invested in shares reached 37.0% and 21.4% for category A and category B respectively, while category C MPFs do not invest in shares due to their risk-averse investment strategy. As regards other investment types, investments in investment funds amounted to HRK 13.6bn (10.6% of the assets), making the proportion of these investments in the assets fall slightly relative to the previous month (by 0.4 p.p.). Investments in cash and deposits amounted to 3.9% of the assets, or HRK 5.0bn.

THIRD PILLAR PENSION FUNDS

In July 2021, the number of members of 8 open-ended voluntary pension funds (OVPFs) rose by 0.5%, while the number of members of 20 closed-ended voluntary pension funds (CVPFs) decreased by 0.1%, making the number of members of these funds reach 343,890 and 45,425 respectively at the end of the month. Total monthly payments made to voluntary pension funds (VPFs) in July amounted to HRK 56.0m, decreasing by 7.4% compared to the previous month. At the same time, total monthly payments from these funds amounted to HRK 24.2m, a 0.7% decrease compared to June. Out of all the payments made from the funds in July, 9.7% were due to death, 20.5% due to the change of fund and the rest of 60.8% due to retirement and other reasons. The largest share of payments (HRK 6.2m) was made due to retirement and in the form of lump-sum payments; the amount of HRK 5.2m was paid through a pension company (fund), while the amount of HRK 5.3m was transferred for payment to pension insurance companies.

Net assets of VPFs grew by 0.8% in July, reaching HRK 7.3bn, with monthly returns of individual funds ranging between 0.13% and 0.79%. The range of annual rates of return was significantly wider and reached from 1.1% to 15.0%, while year-to-date returns ranged from 0.0% to 8.5%. As regards the investment structure of VPFs, the largest part of the portfolio was still made up of bonds with the share of 57.1% in total net assets, followed by shares with a 25.1% share and investment funds with an 11.4% share. The share of bonds in VPFs’ investments increased on a monthly basis by 0.17 p.p., the share of investments in investment funds grew by 0.1 p.p., while equity investment share fell by 1.2 p.p.

PENSION INSURANCE COMPANIES (PIC)

At the end of the second quarter of 2021, there were two pension insurance companies operating on the market and covering 5,769 and 5,867 users in the area of mandatory and voluntary pension insurance respectively. Total assets of the PICs amounted to HRK 1.7bn at the end of the second quarter of 2021, rising by HRK 684.4m or 63.4% compared to the same period last year. Their total comprehensive income in the first six months reached HRK 1.4m, decreasing by 57.2% relative to the same period in 2020.

INSURANCE COMPANIES

In June 2021, there were 15 insurance companies operating on the market. Their total gross written premium in the first seven months of 2021 amounted to HRK 7.4bn, of which HRK 1.8bn (24.3%) related to life insurance premium and HRK 5.6bn (75.7%) to non-life insurance premium. On an annual basis, the total gross written premium rose by 12.4%, with the increase in non-life insurance premium totalling 12.8%, and the rise in life-insurance premium reaching 11.1%. The structure of non-life insurance gross written premium was dominated by motor vehicle liability insurance (31.9%), followed by insurance of land motor vehicles (15.9%) and other property insurance lines (12.6%). The gross amount of claims settled reached HRK 4.1bn, increasing by 7.1% on an annual basis. Out of this amount, HRK 1.7bn related to life insurance (a 1.5% decrease on an annual basis), while HRK 2.4bn related to non-life insurance (a 14.5% increase on an annual basis). In the total amount of claims settled in non-life insurance in the first seven months of 2021, the largest amounts related to motor vehicle liability insurance (34.4%), insurance of land motor vehicles (18.8%), insurance against fire and natural disasters (15.6%) and other property insurance lines (10.1%).

CAPITAL MARKET

The total turnover on the Zagreb Stock Exchange reached HRK 125.8m in July 2021, decreasing by 56.5% compared with the previous month. There was no regular trading in bonds; regular trading in shares recorded a 2.3% monthly growth; while regular trading in ETFs fell by 69.2%. The order book turnover recorded a monthly decrease by 2.9%, while the OTC market turnover increased by 23.1%. Market capitalisation rose by 1.5% on a monthly basis, and stood at HRK 267.5bn at the end of July, of which shares accounted for 49.1% and bonds for 50.9%. As for stock indices, the largest monthly rise was recorded by CROBEXtransport (5.8%) and CROBEXplus (1.0%), while CROBEXturist reported the largest monthly decrease (-4.8%). Valamar riviera d.d. stock was the one most traded in July, with its turnover amounting to HRK 15.7m (13.2% of the overall stock trade value) and a monthly decrease in price by 5.0%.

INVESTMENT FIRMS

In the second quarter of 2021, there were 25 legal entities authorised to provide investment services, namely 6 investment firms, 13 credit institutions and 6 investment fund management companies. In this period, the largest relative growth (46.4%) was recorded by assets managed by investment firms, while a decrease was recorded in the value of assets managed by credit institutions (-2.4%) and investment fund management companies (-3.2%) relative to the previous quarter. Assets under custody of investment firms continued their growing trend, that amounted to 3.0% compared to the previous quarter and to 87.9% compared to the same period last year. Assets under custody of credit institutions increased by 13.4% relative to the previous quarter (12.9% on an annual basis). The second quarter of 2021 saw distribution of financial instruments in the amount of HRK 1.97bn (an increase of 1.8% compared to the previous quarter), 89.9% of which was accounted for by units of domestic UCITS.

INVESTMENT FUNDS

In July 2021, there were also 93 UCITS operating on the market, with their total net assets amounting to HRK 20.7bn at the end of the month and growing by 2.4% compared to the previous month. Just as in the previous month, this growth was due to positive market developments along with positive total net payments made to funds that reached HRK 384.4m. Net payments were positive in all the fund categories (equity funds HRK 25.1m, bond funds HRK 236.8m, feeder funds HRK 44.8m and other funds HRK 44.6m). The highest asset-weighted average monthly return (1.13%) was generated by feeder funds, followed by equity funds (0.97%) and balanced funds (0.80%). Funds belonging to the category “other” recorded a monthly return reaching 0.41%, while bond funds generated a monthly return totalling 0.25%. Bond funds’ net assets accounted for 73.3% of the total net assets of all UCITS at the end of July 2021, while equity and balanced funds accounted for 10.4% and 6.1% of the total net assets of UCITS respectively.

The assets of the Fund for Croatian Homeland War Veterans and Members of their Families amounted to HRK 1.03bn at the end of July, a monthly decrease of 1.1%, with the monthly return of the fund reaching -0.9%.

LEASING COMPANIES

At the end of the second quarter of 2021, the total assets of 15 leasing companies stood at HRK 20.2bn, a decrease by 2.5% on an annual basis. The comprehensive income of the leasing companies rose by HRK 105.6m (176.1%) compared to the same period last year, amounting to HRK 165.5m. The second quarter of 2021 saw a continued falling trend in outstanding contract value of active contracts, reaching 2.9% in the operating lease segment and 1.9% in the finance lease segment. As regards the value of newly concluded contracts in the operating lease segment, the annual growth in contract value accelerated and totalled 25.1% in the second quarter of 2021. The rise in the value of newly concluded contracts in the finance lease segment amounted to 34.5% on an annual basis. This was mostly due to a large increase in the value of contracts involving passenger cars (HRK 2.2bn), commercial vehicles (HRK 743.4m) and plant, machinery and equipment (HRK 366.2m) as leased assets. On an aggregate level, the value of newly concluded contracts recorded by the total leasing industry rose in the second quarter of 2021 by HRK 3.1bn (32.9%) on an annual basis, largely due to an increase in the value of contracts involving passenger cars (HRK 1.8bn), commercial vehicles (HRK 699.8m) and plant, machinery and equipment (HRK 353.4m) as leased assets.

FACTORING COMPANIES

At the end of the second quarter 2021, there were 4 factoring companies operating on the market. Their total assets amounted to HRK 311.4m (a 15.8% fall compared to the same period in 2020), and their total profit reached HRK 1.9m (a 14.6% annual decrease). The transaction volume was still dominated by classic factoring totalling HRK 342.2m (75.2% of the transactions), as were receivables, with classic factoring amounting to HRK 106.1m (62.4% of the receivables) at the end of the second quarter.           

The full report is available here.