June 2021 Monthly Report

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

PENSION FUNDS

SECOND PILLAR PENSION FUNDS

At the end of June 2021, mandatory pension funds (MPFs) had 2,072,616 members, i.e. 2,451 (0.12%) members more than in the previous month. The majority of new members still leave it to Regos to select their fund for them, and in June 2021, Regos assigned 3,559 new members (95.5%). In the last 12 months, the average growth rate of members for category A MPFs was 6.1%, for category C it was 1.9%, while for category B it remained slightly negative (-0.1%), mainly due to the regular transition of insured persons to category C. At the same time, termination of membership due to retirement or death was recorded with respect to 1,277 members, i.e. 682 (34.8%) members less than in May. Total net contributions paid to MPFs in June amounted to HRK 608.4 m, a 0.2% increase compared to the previous month. Since the beginning of the year, a total of HRK 3.6 bn have been paid to MPFs (HRK 1.8 bn in the first and HRK 1.8 bn in the second quarter of 2021). At the same time, total payments from all the MPFs due to personal account closures reached HRK 222.7 m, dropping by 12.5% compared to May 2021. Looking at total payments from MPFs due to personal account closures, a total of HRK 861.7 m have been paid since the beginning of the year (HRK 300.00 m in the first and HRK 561.7 m in the second quarter of 2021, which was 87.2% more than in the first quarter of 2021).

In June 2021, net assets of MPFs increased by 0.9% relative to the previous month and stood at HRK 126.4 bn. Monthly Mirex returns stood at 1.1% for category B, 0.6% for category C and 0.03% for category A, continuing the recovery trend of unit values in 2021. Year-to-date Mirex returns stand at 0.1% for category C, 4.2% for category B and 7.6% for category A, while annualised returns since the beginning of MPFs’ operation reached 7.5% for Mirex A, 5.5% for Mirex B and 4.8% for Mirex C[1] at the end of June 2021.

Bond investments of MPFs reached HRK 80.0 bn (63.3% of total assets) at the end of June, making their share by 0.3 percentage points higher than in May. At the same time, the share of equity investments in the assets of MPFs increased by 2.2 p.p., amounting to HRK 25.3 bn (20.0% of MPFs’ assets) at the end of June 2021. Investments in domestic shares accounted for 11.3%, while investments in foreign shares accounted for 8.8% of MPFs’ assets. Viewed by categories, category A MPFs have 37.1% of their assets invested in shares, category B MPFs have 21.2% of their assets invested in shares, while category C MPFs do not invest in shares due to their risk-averse investment strategy. As regards other investment types, the most common were investments in investment funds, reaching HRK 13.6 bn (10.8% of assets), so the proportion of these investments in assets increased by 0.4 percentage points compared to May. At the same time, investments in cash and deposits amounted to HRK 5.9 bn, i.e. 4.7% of assets.

THIRD PILLAR PENSION FUNDS

At the end of June 2021, 8 open-ended voluntary pension funds (OVPFs) had 342,226 members, an increase of 0.6% on the monthly level. The number of members of 20 closed-ended voluntary pension funds (CVPFs) increased by 1.6% on the monthly level (721 members), with CVPFs having 45,461 members at the end of June 2021.

Total monthly payments made to voluntary pension funds (VPFs) in June amounted to HRK 60.5 m, increasing by 11.1% compared to May. At the same time, total monthly payments from these funds amounted to HRK 24.3 m, a 17.1% decrease compared to the previous month. Out of all payments in June, 18.4% were due to death, 21.0% due to change of fund and the rest of 60.6% due to retirement. The largest share of payments (HRK 6.1 m) due to retirement was paid in the form of lump-sum payments, the amount of HRK 5.3 m was paid through a pension company (fund), while HRK 3.0 m was transferred via pension insurance companies.

Net assets of VPFs grew by 1.2% in June, reaching HRK 7.2 bn, with monthly returns of individual funds ranging between -0.1% and 1.5%. Annual rates of return ranged from 0.2% to 14.5%, while year-to-date returns ranged from -0,3% to 7.6%. As regards the investment structure of VPFs, the largest part of the portfolio is still made up by bonds with the share of 55.5% in total net assets, followed by shares with 26.3% and investment funds with 11.3%. Share of bonds in VPFs’ investments decreased on the monthly basis by 0.7 p.p., share of investments in investment funds increased by 0.5 p.p., while equity share increased by 0.6 p.p.

INSURANCE COMPANIES

In June 2021, there were 15 insurance companies operating on the market. Total gross written premium for the first six months of 2021 amounted to HRK 6.4 bn, of which HRK 1.6 bn related to life insurance premium and HRK 4.8 bn to non-life insurance premium. The structure of gross written premium of non-life insurance is dominated by motor vehicle liability insurance (31.1%), followed by insurance of land vehicles (14.9%) and other property insurance lines (13.2%). On the annual level, premium in life insurance increased by 13.3%, premium in non-life insurance by 13.1%, while the total gross written premium increased by 13.1%. The gross amount of settled claims totalled HRK 3.5 bn, increasing by 8.2% on an annual basis. HRK 1.5 bn of this amount relates to life insurance (a 2.7% decrease on the annual level), while HRK 2.0 bn relates to non-life insurance (a 18.2% increase on the annual level). In the total amount of claims settled in non-life insurance in the first six months of 2021, the largest amounts relate to motor vehicle liability insurance (34.7%), insurance of land vehicles (18.5%), insurance against fire and natural disasters (16.0%) and other property insurance lines (9.7%).

CAPITAL MARKET

The total turnover on the Zagreb Stock Exchange reached HRK 288.9 m in June 2021, increasing by 28.8% compared with the previous month. Regular trading in bonds decreased by 88.2% and trading in shares by 33.6%. However, block trade in shares recorded a monthly increase of 420.9%, and trading in ETFs grew by 13.8%. The order book turnover recorded a monthly decrease of 35.3%, as well as the OTC market turnover (12.3%). Market capitalisation rose on the monthly level by 0.4%, and stood at HRK 263.6 bn at the end of June. As for stock indices, the largest monthly rise was recorded by CROBEXtransport (6.5%) and CROBEXindustrija (2.9%), while only CROBEXkonstrukt reported a fall (-2.1%). Atlantska plovidba stock was again most traded in June, with its turnover amounting to HRK 15.4 m (13.2% of the overall trade in stocks) and a monthly increase in price of 19.3%.

INVESTMENT FUNDS

In June 2021, there were 93 UCITS operating on the market, while 3 UCITS are undergoing winding up-proceedings. Two new UCITS, one of which is “green” in the feeder funds category, commenced their operation, while in the bond fund category one fund was merged with another. This increased the total number of UCITS in June 2021 by one, relative to the previous month. Total net assets of UCITS amounted to HRK 20.2 bn at the end of June, again growing by 0.7% compared to the previous month. Positive net payments (HRK 304.4 m) to all categories of funds again contributed to this (equity funds with HRK 50.0 m, bond funds with HRK 66.7 m and other funds with HRK 79.3 m of net payments). Same as in the previous month, positive market trends also contributed to the growth of net assets of UCITS. In June 2021, the highest average monthly returns (2.52%) were recorded by equity funds, bond funds achieved average monthly returns of 0.23%, while average monthly returns of other funds ranged from 0.88% to 2.37%. Net assets of bond funds at the end of June 2021 accounted for 73.6% of the total net assets of all UCITS, while equity and balanced funds accounted for 10.4% and 6.1% 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 1.04 bn at the end of June, a monthly increase of 1.1%, with monthly returns reaching 2.3%.

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

The full report is available at Publications/Monthly reports.