July 2022 Monthly Report

Overview of supervised entities’ activities in the financial services sector for July 2022

PENSION FUNDS

SECOND PILLAR PENSION FUNDS

At the end of July 2022, mandatory pension funds (MPFs) had 2,140,454 members, i.e. 7,081 (0.33%) members more than in the previous month. Category B funds had 87.9% of all MPF members, while category A and category C funds had 8.8% and 3.3% of all MPF members respectively. Out of 8,370 new members, 8,218 (98.2%) were automatically allocated by REGOS. Termination of membership due to retirement or death was recorded with respect to 1,289 insured persons. Total net contributions paid to MPFs in July amounted to HRK 713.1 m (0.6% of net assets at end-June 2022) or 2.0% more compared to the previous month. At the same time, total payments from all MPFs due to personal account closures reached HRK 179.1m (0.1% of net assets at end-June 2022), dropping by 29.4% compared to the previous month.

At the end of July 2022, net assets of MPFs amounted to HRK 132.3bn, rising by HRK 3.2bn (2.54%) relative to the previous month. Monthly Mirex returns reached 2.3% for category A, 2.1% for category B and 1.4% for category C. Annual Mirex returns reached 1.6% for category A, -0.5% for category B and -3.5% for category C, while annualised returns since the beginning of MPFs’ operation reached 6.8% for Mirex A, 5.2% for Mirex B and 3.7% for Mirex C[1].

At the end of July, bond investments of MPFs totalled HRK 85.5bn (64.6% of total assets), making their share decrease by 0.1 p.p. on a monthly basis. The share of equity investments in MPFs’ assets remained unchanged, amounting to 20.3% of MPFs’ assets (HRK 26.8bn). Investments in domestic shares accounted for 12.1%, while investments in foreign shares accounted for 8.2% of mandatory pension funds’ assets. As regards other investment types, investments in investment funds amounted to HRK 14.3bn (10.8% of the assets), making the proportion of these investments in total assets increase by 0.2 p.p. relative to the previous month. Investments in cash and deposits amounted to 3.7% of the assets, or HRK 4.8bn.

THIRD PILLAR PENSION FUNDS

In July 2022, the number of members of 8 open-ended voluntary pension funds (OVPFs) rose by 0.4% on a monthly basis, while the number of members of 20 closed-ended voluntary pension funds (CVPFs) increased by 0.2%, making the number of members of these funds reach 364,783 and 46,699 respectively. Total monthly payments made to voluntary pension funds (VPFs) in July 2022 amounted to HRK 53.6m (0.7% of net assets at end-June 2022), decreasing by 3.8% compared to the previous month. Total payments made from these funds reached HRK 23.0m, decreasing by HRK 5.2m (18.6%) compared to total payments made from VPFs in the previous month. Total payments from VPFs made due to retirement and other reasons accounted for 76.3%, payments made due to the change of fund reached 17.0%, while those made due to death accounted for 6.7% of total payments in July. As regards total payments made due to retirement, the amount of HRK 5.9m was paid in the form of lump-sum payments, HRK 6.6m was paid through a pension company (fund), while HRK 5.3m was transferred for payment to pension insurance companies.

In July 2022, net assets of VPFs increased by HRK 176.5m (2.3% on a monthly basis) and stood at HRK 7.7bn. Monthly nominal returns of VPFs ranged from 1.1% to 3.2%, while returns on an annual basis ranged from -6.04% to -0.5%. As regards the investment structure of VPFs, the largest part of the portfolio was made up of bonds and amounted to a 56.6% share in total net assets, followed by stocks with a 25.0% share and investment funds with a 10.5% share. The share of bonds in VPFs’ investments increased on the monthly basis by 2.9 p.p., the share of investments in investment funds rose by 0.1 p.p., while equity share decreased by 0.3 p.p.

PENSION INSURANCE COMPANIES (PICs)

At the end of the second quarter of 2022, there were two pension insurance companies operating on the market and covering 9,205 and 5,394 users in the area of mandatory and voluntary pension insurance respectively. Total assets of PICs amounted to HRK 2.4bn at the end of the second quarter of 2022, rising by HRK 655.4m or 37.9% compared to the same period last year. Total pre-tax loss recorded by PICs in the first half of 2022 reached HRK 13.4m, while their profit recorded in the same period last year stood at HRK 2.8m.

INSURANCE COMPANIES

In July 2022, there were 15 insurance companies operating on the market. Their total gross written premium since the beginning of 2022 amounted to HRK 7.9bn, of which HRK 1.8bn (22.3%) related to life insurance premium and HRK 6.2bn (77.7%) to non-life insurance premium. On an annual basis, total gross written premium rose by 7.5% in the first seven months, with the increase in non-life insurance premium totalling 10.4%, and the decline in life-insurance premium reaching 1.4%. The structure of non-life insurance gross written premium was dominated by motor vehicle liability insurance (30.6%), followed by insurance of land motor vehicles (15.4%) and other property insurance lines (13.5%). The amount of claims settled reached HRK 4.4bn, increasing by 6.8% on an annual basis. HRK 1.9bn of this amount related to life insurance (a 7.7% increase on an annual basis), while HRK 2.5bn related to non-life insurance (a 6.2% rise on an annual basis). In the total amount of claims settled in non-life insurance in July, the largest amounts related to motor vehicle liability insurance (39.9%), insurance of land motor vehicles (20.1%), insurance against fire and natural disasters (8.6%) and other property insurance lines (9.8%).

CAPITAL MARKET

In July 2022, the total turnover on the Zagreb Stock Exchange reached HRK 142.3m, decreasing by 5.2% on a monthly basis. Market capitalisation fell slightly (by 0.4%) relative to the previous month and stood at HRK 262.6bn, of which stocks amounted to HRK 136.7bn, bonds to HRK 125.8bn and ETFs to 63m. As for stock indices, the largest monthly rise was recorded by CROBEXtransport (2.0%), while CROBEX10 recorded the largest monthly decrease (-2.8%). The main ZSE stock indices (CROBEX and CROBEX10) recorded a monthly fall, too (-2.2% and -1.9% respectively), as did bond indices CROBIS (-1.9%) and CROBIStr (-1.7%). Atlantska plovidba d.d. was the stock most traded in July, with its turnover amounting to HRK 12.2m (12.2% of the overall trade in stocks in July) and a 4.9% monthly price decrease.

INVESTMENT FIRMS

In the second quarter of 2022, there were 23 legal entities authorised to provide investment services, namely 5 investment firms, 12 credit institutions and 6 investment fund management companies. In this period, the value of assets managed by all the three types of portfolio management service providers declined. The largest decrease was recorded by assets managed by credit institutions (-8.7%), followed by assets managed by investment fund management companies (-7.2%) and assets managed by investment firms (-6.6%). Assets under custody of investment firms continued their growing trend, that amounted to 9.4% compared to the previous quarter, while assets under custody of credit institutions declined by 4.3% relative to the previous quarter. The second quarter of 2022 saw distribution of financial instruments in the amount of HRK 2.7bn (a 25.5% increase compared to the previous quarter), 50.5% of which was accounted for by units of domestic AIF-s and 39.8% by units of domestic UCITS.

INVESTMENT FUNDS

In July 2022, there were 92 UCITS operating on the market, one fewer than in June, as one fund belonging to the “other funds” category ceased its operation due to maturity. Total net assets of UCITS amounted to HRK 16.8bn at the end of the month, increasing by HRK 151.7m or 0.9% compared to the previous month. The trend of negative total monthly net payments recorded by UCITS was stopped, with payments recovering the positive sign in July (HRK 65.4m), primarily due to positive net payments made to UCITS belonging to the “other funds” category (HRK 154.1m). Negative monthly net payments were recorded by equity funds (HRK -16.8m), balanced funds (HRK -13.8m), feeder funds (HRK -2.2m) and bond funds (HRK -55.9m). Bond funds’ net assets accounted for 66.2% of the total net assets of all UCITS at the end of July, while equity and balanced funds accounted for 12.6% and 7.0% of the total UCITS’ net assets respectively. In July 2022, all types of UCITS recorded positive asset-weighted average monthly returns, namely feeder funds 7.3%, equity funds 2.3%, balanced funds 4.2%, other funds 3.2% and bond funds 1.1%.

Net assets of the Fund for Croatian Homeland War Veterans and Members of their Families amounted to HRK 954.7m (a 2.0% monthly decrease), with the monthly return of the fund reaching -1.9%.

LEASING COMPANIES

At the end of the second quarter of 2022, the total assets of 15 leasing companies stood at HRK 21.6bn, an increase of 7.2% on an annual basis. Pre-tax profit recorded by leasing companies rose by HRK 59.9m (30.3%) compared to the same period last year, amounting to HRK 257.5m. The outstanding contract value of active contracts continued its downward trend in the operating lease segment, decreasing by 2.7% on the annual level, while in the finance lease segment it rose by 9.7%. The value of newly concluded contracts in the operating lease segment rose in the first six months by 4.7% relative to the same period last year, while this growth in the finance lease segment amounted to HRK 32.6%. This was mostly due to an increase in the value of contracts involving passenger cars (HRK 2.8bn), commercial vehicles (HRK 999.2m) and plant, machinery and equipment (HRK 430.8m) as leased assets. The total value of newly concluded contracts in the first six months of 2022 increased by HRK 1.2bn (28.0%) on an annual basis.

FACTORING COMPANIES

At the end of the second quarter of 2022, there were four factoring companies operating on the market. Their total assets amounted to HRK 235.5m, while their pre-tax profit reached HRK 1.8m. The transaction volume in the first half of 2022 was still dominated by classic factoring totalling HRK 252.7m (82.1% of all transactions), as were receivables, with classic factoring amounting to HRK 79.0m (82.1% of all receivables) at the end of the second quarter of 2022.

The full report is available at Publications/Monthly reports.

[1] Beginning of operation: MPF category B: 30/4/2002; MPFs category A and C: 21/08/2014