October 2022 Monthly Report

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

PENSION FUNDS

SECOND PILLAR PENSION FUNDS

At the end of October 2022, mandatory pension funds (MPFs) had 2,165,930 members, i.e. 5,714 (0.3%) members more than in the previous month. Category B funds had 86.3% of all MPF members, while category A and category C funds had 10.1% and 3.6% of all MPF members respectively. Out of 7,613 new members, 7,305 (96.0%) were automatically allocated by Regos. Termination of membership due to retirement or death was recorded with respect to 1,899 insured persons. Total net contributions paid to MPFs in October amounted to HRK 705.4m (0.6% of net assets at end-September 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 247.8m (0.2% of net assets at end-September 2022), rising by 57.8% compared to the previous month.

At the end of October 2022, net assets of MPFs amounted to HRK 130.8bn, rising by HRK 1.4bn (1.1%) relative to the previous month. Nominal monthly Mirex returns reached 1.4% for category A, 0.8% for category B and 0.03% for category C. Annual Mirex returns reached -3.3% for category A, -4.0% for category B and -6.0% for category C, while annualised[1] returns since the beginning of MPFs’ operation reached 6.3% for Mirex A, 5.0% for Mirex B and 3.3% for Mirex C[2].

At the end of October, bond investments of MPFs totalled HRK 85.6bn (63.2% of total assets), making their share decrease by 2.1 p.p. on a monthly basis. The share of equity investments in MPFs’ assets slightly increased (0.1 p.p.), amounting to 19.7% of MPFs’ assets (HRK 25.7bn). Investments in domestic shares accounted for 11.9%, while investments in foreign shares accounted for 7.7% of mandatory pension funds’ assets. As regards other investment types, investments in investment funds amounted to HRK 14.2bn (10.9% of the assets), making the proportion of these investments in total assets increase by 0.4 p.p. relative to the previous month. Investments in cash and deposits amounted to HRK 7.5bn, i.e. 5.7% of MPFs’ assets at the end of October 2022.

THIRD PILLAR PENSION FUNDS

In October 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 0.1%, making the number of members of these funds reach 369,296 and 46,752 respectively. Total monthly payments made to voluntary pension funds (VPFs) in October 2022 amounted to HRK 54.7m (0.7% of net assets at end-September 2022), decreasing by 3.8% compared to the previous month. Total payments made from these funds reached HRK 24.0m, decreasing by HRK 2.1m (7.9%) compared to total payments made from VPFs in the previous month. Total payments from VPFs made due to retirement and other reasons accounted for 75.5%, payments made due to the change of fund reached 18.4%, while those made due to death accounted for 6.1% of total payments in October. As regards total payments made due to retirement, the amount of HRK 5.6m was paid in the form of lump-sum payments, HRK 7.1m was paid through a pension company (fund), while HRK 5.4m was transferred for payment to pension insurance companies.

In October 2022, net assets of VPFs increased by HRK 96.1m (1.3% on a monthly basis) and stood at HRK 7.6bn. Monthly nominal returns of VPFs ranged from 0.02% to 2.0%, while returns on an annual basis ranged from -11.7% to -3.5%. As regards the investment structure of VPFs, the largest part of the portfolio at the end of October was made up of bonds and amounted to a 53.6% share in total net assets, followed by stocks with a 24.6% share and investment funds with a 10.9% share. The share of bonds in VPFs’ investments decreased on the monthly basis by 3.1 p.p., the share of investments in investment funds rose by 0.4 p.p., while equity share increased by 0.3 p.p.

PENSION INSURANCE COMPANIES (PICs)

At the end of the third quarter of 2022, there were two pension insurance companies operating on the market and covering 10,376 and 5,308 users in the area of mandatory and voluntary pension insurance respectively. Total assets of the PICs amounted to HRK 2.6bn at the end of the third quarter of 2022, rising by HRK 708.0m or 37.3% compared to the same period last year. Total pre-tax loss recorded by PICs in the first nine months of 2022 reached HRK 26.9m, while their profit recorded in the same period last year stood at HRK 6.3m.

INSURANCE COMPANIES

In October 2022, there were 15 insurance companies operating on the market. Their total gross written premium since the beginning of 2022 amounted to HRK 10.6bn, of which HRK 2.4bn (22.1%) related to life insurance premium and HRK 8.3bn (77.9%) to non-life insurance premium. On an annual basis, total gross written premium rose by 7.6% in the first nine months of 2022, with the increase in non-life insurance premium totalling 10.7%, and the decline in life-insurance premium reaching 1.9%. The structure of non-life insurance gross written premium was dominated by motor vehicle liability insurance (32.3%), followed by insurance of land motor vehicles (16.0%) and other property insurance lines (11.7%). The amount of claims settled reached HRK 6.3bn, increasing by 8.1% on an annual basis. HRK 2.7bn of this amount related to life insurance (a 11.8% increase on an annual basis), while HRK 3.6bn related to non-life insurance (a 5.6% rise on an annual basis). In the total amount of claims settled in non-life insurance in October, the largest amounts related to motor vehicle liability insurance (38.4%), insurance of land motor vehicles (20.1%), insurance against fire and natural disasters (7.7%) and other property insurance lines (12.9%).

CAPITAL MARKET

In October 2022, the total turnover on the Zagreb Stock Exchange reached HRK 346.2m, decreasing by 19.0% on a monthly basis. Market capitalisation fell slightly (by 0.9%) relative to the previous month and stood at HRK 254.8bn, of which stocks amounted to HRK 134.1bn, bonds to HRK 120.7bn and ETFs to 53m. As for stock indices, which were all positive, the largest monthly rise was recorded by CROBEXtransport (10.8%), while CROBEX10tr recorded the smallest monthly rise (1.2%). The main ZSE stock indices (CROBEX and CROBEX10) recorded a monthly growth of 1.2% each. Both bond indices recorded a monthly decrease: CROBIS (-3,0 %) and CROBIStr (-2,8 %). PODRAVKA d.d. was the stock most traded in October, with its turnover amounting to HRK 27.1m (25.5% of the overall trade in stocks in October) and an 10.1% monthly price increase.

INVESTMENT FIRMS

In the third 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 decreased relative to the previous quarter. The value of assets managed by investment firms stood at HRK 30.8m (a 0.8% decrease), the value of portfolio managed by credit institutions amounted to HRK 388.7m (a 6.4% decrease), while the value of portfolio managed by investment fund management companies reached HRK 4.2bn (a 1.1% decrease). The largest decrease was recorded by assets managed by credit institutions (-6.4%), followed by assets managed by investment fund management companies (-1.1%) and assets managed by investment firms (-0.8%). The growing trend of assets under custody of investment firms (which has been going on since the end of 2019) was interrupted, and they decreased by 12.6% compared to the previous quarter, while assets under custody of credit institutions continued their downward trend (which has been going on since the end of 2021), decreasing by 6.3% relative to the previous quarter. The third quarter of 2022 saw the distribution of financial instruments in the amount of HRK 1.4bn (a 48% decrease compared to the previous quarter), 92.5% of which was accounted for by units of domestic UCITS, 1.0% by units of foreign UCITS, 4.5% by foreign certificates and 2.0% by other financial instruments.

INVESTMENT FUNDS

In October 2022, there were 96 UCITS operating on the market, two more than in the previous month, as two new funds categorised as “other” started to operate. Total net assets of UCITS amounted to HRK 16.5bn at the end of the month, decreasing by HRK 21.3m or 0.1% compared to the previous month. The trend of positive monthly net payments that started in July was interrupted in October, when the payments stood at HRK -134.9m. Negative monthly net payments were recorded by equity funds (HRK -25.8m), balanced funds (HRK -16.8m), feeder funds (HRK -9.5m) and bond funds (HRK -200.1), while only the category of other UCITS recorded positive net payments (HRK 116.7m). Bond funds’ net assets accounted for 66.7% of the total net assets of all UCITS at the end of October, while equity and balanced funds accounted for 11.9% and 6.5% of the total net assets of UCITS respectively. In October 2022, all types of UCITS recorded positive asset-weighted average monthly returns, namely equity funds 2.9%, feeder funds 2.6%, balanced funds 2.0%, other funds 1.1% and bond funds 0.3%.

Net assets of the Fund for Croatian Homeland War Veterans and Members of their Families amounted to HRK 951.8m (a 1.6% monthly decrease), with the monthly return of the fund reaching -1.4%.

LEASING COMPANIES

At the end of the third quarter of 2022, the total assets of 15 leasing companies stood at HRK 22.2bn, an increase of 10.3% on an annual basis. Pre-tax profit recorded by leasing companies rose by HRK 57.0m (16.6%) compared to the same period last year, amounting to HRK 399.8m. The outstanding contract value of active contracts continued its downward trend in the operating lease segment, decreasing by 3.2% on the annual level, while in the finance lease segment it rose by 12.7%. The value of newly concluded contracts in the operating lease segment rose in the first nine months by 6.1% relative to the same period last year, while this growth in the finance lease segment amounted to HRK 36.0%. This was mostly due to an increase in the value of contracts involving passenger cars (HRK 4.3bn), commercial vehicles (HRK 1.6bn) and plant, machinery and equipment (HRK 678.3m) as leased assets. The total value of newly concluded contracts in the first nine months of 2022 increased by HRK 1.9bn (31.3%) on an annual basis.

FACTORING COMPANIES

At the end of the third quarter of 2022, there were 4 factoring companies operating on the market. Their total assets amounted to HRK 231.0m, while their pre-tax profit reached HRK 0.7m. The transaction volume in the first nine months of 2022 was still dominated by classic factoring totalling HRK 359.6m (87.4% of all transactions), as were receivables, with classic factoring amounting to HRK 62.3m (88.7% of all receivables) at the end of the third quarter of 2022.

The full report is available at Publications/Monthly reports.

[1]The annualised return is the geometric average of annual returns realised in the period observed.

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