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Czech Banks Market Share

Jiří Staník
July 20, 2022

CSOB was the most profitable bank in the fourth quarter of 2020 with a net profit of CZK 2,169 mil, Moneta Stavebni Sporitelna was the most cost efficient (cost to income at 28.2%).

MONETA Money Bank grew its loans the most (up 44.5% qoq) while Hypotecni Banka had the biggest increase in deposits (258% qoq).

The three largest banks created 13.4% of sector's total profit in the fourth quarter of 2020, down when compared to 14.5% seen three years ago.

Profitability & Cost Efficiency

Czech banks reported a net profit of CZK 47,470 ths in the fourth quarter of 2020, down 47.9% when compared to previous year. This implies ROE of 28.7% in 4Q2020. In the last twelve months, profits fell 43.6% yoy to CZK 127,209 ths and ROE reached 19.4%.

CSOB generated the largest net profit in the last quarter (CZK 2,169 mil) followed by Komercni Banka and Ceska Sporitelna. At the other end of the scale was Expobank Czech Republic with a reported loss of CZK 99.7 mil:

The three largest banks created 13.4% of sector's total profit in the fourth quarter of 2020, down when compared to 14.5% seen three years ago. In terms of revenue and operating profit, the trio generated 14.2% and 13.2% of the total:

Banks operated with average cost to income of 40.6% in the last quarter as operating costs fell 5.68% yoy. Staff accounted for 58.0% of operating expenditure with a total of 40,713 employees in the sector. While Moneta Stavebni Sporitelna was the most cost efficient based on the cost to income ratio in the fourth quarter of 2020 (with 28.2%), Hypotecni Banka operated with the lowest operating costs when compared to a sum of loans and deposits, i.e. when utilization of both assets as well as liabilities is taken into account (0.266%):

Commercial banks generated operating profit before provisioning of CZK 94,214 mil in the fourth quarter of 2020, up 250% when compared to last year:

Ceska Sporitelna generated the largest operating profit in the fourth quarter of 2020 (CZK 5,461 mil), whilst Fio banka was operating with the highest operating margin when compared with risk weighted assets (8.27%):

Asset Quality

Provisions have "eaten" some of operating profit in the fourth quarter of 2020 as cost of risk reached 3.22% of average loans. The volume of non-performing loans increased by 14.9% qoq to CZK 99.0 bil and represented 2.96% of total loans at the end of December. Provisions covered 83.2% of NPLs, up from 76.2% a year ago:

Within the sector, Moneta Stavebni Sporitelna had to create the most provisions in the fourth quarter of 2020 relative to its loans (4.33%) and Wustenrot Hypotecni banka the least (-1.04%). The cost of risk therefore "erased" 60.8% of bank's operating profit created during the quarter. In terms of overall asset quality, Banka Creditas was operating with the highest share of non-performing loans, some 17.5% of customer loans at the end of December:

Loan Growth & Market Share

Loan Growth & Market Share

Loans decreased by 0.651% qoq to CZK 3,596 ths during the fourth quarter of 2020. This implies an annual growth rate of 4.20% in the last 12 months.

Banka Creditas has grown the fastest in relative terms within the last quarter (21.1% qoq), followed by UniCredit Bank Czecho-Slovakia and Air Bank. In absolute terms, however, UniCredit Bank Czecho-Slovakia the largest piece of the pie when compared to the previous quarter (CZK 68,271 mil or -290% of the market net increase) followed by Raiffeisenbank Czech Republic and CSOB:

Overall, CSOB remains the largest lender with 26.0% of the market followed by Ceska Sporitelna with a 20.8% market share and Komercni Banka (18.9%). At the end of December 2020, most of CSOB's loans came from residential mortgages (49.0% of total). Corporate loans formed 32.1% and consumer loans represented a further 3.65% of the total loan book:

As partly seen above, the three largest banks held 65.7% of the loan market at the end of December (up from 63.9% a year ago) while the five largest banks provided 87.4% of loans (compared to 83.9% a year ago).

Interest Yields & Rates

Average asset yield fell to 9.03% in the fourth quarter of 2020, up 6.01 bp when compared to the same period of last year. Banks charged on average 2.49% on mortgage loans (down 0.040 bp compared to last year's 2.53%), interest on consumer loans reached 8.80% (down 0.570 bp from 9.37%) and corporate loans were priced at 2.56% (down 1.24 bp) in the fourth quarter of 2020.

In the arena of 19 Czech banks, MONETA Money Bank has been operating with the highest asset yield in the fourth quarter of 2020 (3.02% on total assets), followed by Equa Bank (2.99%) and Moneta Stavebni Sporitelna (2.99%). At the other end of the spectrum was Air Bank with only -0.675% and Fio banka with 1.07% of average assets.

In terms of momentum, Hypotecni Banka decreased its asset yield the least in the last 12 months, by 5.60 bp to 2.44%, followed by Raiffeisen Stavebni Sporitelna (down by 11.2 bp) and CSOB Stavebni Sporitelna (down by 12.6 bp):

Mortgage Loans

Mortgage loans grew 7.98% yoy in the last 12 months and were up 2.30% qoq in the last quarter. At the end of December, mortgages formed 39.9% of total loans.

Within the set of available data, Air Bank has grown the fastest in mortgages in relative terms within the last quarter (31.2 qoq), followed by mBank Czech Republic and MONETA Money Bank. In absolute terms, however, MONETA Money Bank appears to have captured most of the new market when compared to the previous quarter (CZK 7,824 mil or 24.2% of the market increase) followed by CSOB Stavebni Sporitelna (21.1%) and Ceska Sporitelna (20.7%):

Overall, CSOB was the largest mortgage lender with 31.9% of the market followed by Hypotecni Banka (with a 23.3% share ) and Ceska Sporitelna (21.3%). Looking at the last 12 months, MONETA Money Bank gained the most in market share - 125 bp to 6.86% - compared to Air Bank's 62.6 bp (to 0.511%) and mBank Czech Republic's 30.3 bp (a market share of 1.68%):

The combined trio of largest banks held 70.3% of outstanding mortgage loans in December 2020. We estimate they accounted for 55.6% of consumer and 79.0% of all corporate loans at the end of December 2020.

Consumer & Corporate Loans

Consumer loans increased 0.348% qoq (up 1.82% yoy) and represented % of total bank loans while corporate loans. Air Bank seems to have grown the fastest in consumer loans within the last quarter (227% qoq), followed by mBank Czech Republic and MONETA Money Bank. In absolute terms, however, Komercni Banka was the largest consumer lender at the end of the quarter:

Corporate loans fell 3.33% qoq and were up 0.280% yoy to CZK 1,123 bil (or 31.2% of loans). We guesstimate that Wustenrot Hypotecni banka seems to have grown the fastest in corporate loans within the last quarter (9.70% qoq) while Komercni Banka was the largest corporate lender at the end of the quarter:

Deposits & Market Share

Customer deposits decreased 6.99% qoq to CZK 5,162 bil during the fourth quarter of 2020. This means an annual growth rate of 8.92%, which is above the average growth of 6.35% we have seen in deposits in the last decade:

Households deposits grew 3.25% qoq and 12.2% yoy in the last 12 months and represented 59.2% of total customer deposits at the end of December 2020. Corporate deposits decreased by 1.17% qoq (or 14.9% yoy) and made up 619% of total.

Hypotecni Banka appears to have grown the fastest in deposits in relative terms last quarter compared to the next bunch of Czech banks (258% qoq), followed by MONETA Money Bank and Fio banka. In absolute terms, when compared to the previous quarter, however, most new deposits went to Raiffeisenbank Czech Republic (CZK 10,567 mil) followed by Air Bank and mBank Czech Republic:

Overall, Ceska Sporitelna remains the largest deposit collector with a 21.2% market share followed by CSOB (20.8%) and Komercni Banka (17.6%). The three largest banks held 59.6% of customer deposits at the end of third quarter. When compared to the same period of last year, we estimate that they have gained 1.15% of the market.

Interest Cost & Rates

Average cost of funding grew to 3.12% in the fourth quarter of 2020, down 1.96 bp when compared to the same period of last year. Banks paid on average 0.050% on outstanding corporate deposits (down 0.010 bp) and 0.260% on household deposits (down 0.020 bp).

Current account deposits represented 82.5% of the total as low interest and excess of liquidity did not inspire retailers to save nor banks to offer attractive rates. The share of current accounts increased from 53.5% of the total a decade ago:

With regard to the 19 banks below, Air Bank has been operating with the lowest cost of funding in the fourth quarter of 2020 (-3.93% on total liabilities), followed by UniCredit Bank Czecho-Slovakia (0.121%) and Fio banka (0.175%). At the other end of the spectrum was Hypotecni Banka with 1.94% and CSOB Stavebni Sporitelna with 1.78%.

In terms of momentum, CSOB Stavebni Sporitelna's cost of funds increased the most in the last 12 months, from 1.51% to from 1.78%, followed by Hypotecni Banka (up by 0.144 bp) and Raiffeisen Stavebni Sporitelna (up -0.048 bp):

Funding & Capitalization

Loan to deposit ratio accounted for 69.7% in the Czechia at the end of fourth quarter of 2020, down from 72.8% a year ago and 78.0% in 2010. When comparing only household loans and deposits, the ratio was 60.8% at the end of December 2020:

Wustenrot Hypotecni banka banka had the most "liquid" balance sheet measured by the loan to deposit ratio at the end of December 2020 (170%) followed by Hypotecni Banka with 113% and Modra Pyramida Stavebni Sporitelna (106%). In relative terms, UniCredit Bank Czecho-Slovakia increased the utilization of the balance sheet the most measured by a relative increase in loan to deposit ratio:

Czech banks operated with capital adequacy ratio of 24.4% at the end of the fourth quarter of 2020, up 3.07 bp when compared to the same period of last year. Sector's Tier 1 ratio reached 23.6% and equity accounted for 18.6% of loans. This is up 5.70 bp and down %down bp when compared to five years ago.

Hypotecni Banka reported the highest capital adequacy ratio (45.9%) followed by Modra Pyramida Stavebni Sporitelna (29.0%) and Expobank Czech Republic. Wustenrot Hypotecni banka and Moneta Stavebni Sporitelna managed to operate with relatively low capital ratios of 13.7% and 14.8%, respectively:

Adjusted Profitability

Overall, Czech banks generated its shareholders an annualized return on equity of 28.7% in the fourth quarter of 2020 and 19.4% return in the last four quarters. When equity "adjusted" to 15% of risk-weighted assets, the return on equity would have reached 56.5% in 4Q2020 and 37.3% in the last twelve months.

Wustenrot Hypotecni banka generated its shareholders the highest return in the last quarter (ROE of 18.3%) followed by Fio banka (13.8%) and Moneta Stavebni Sporitelna (12.6%). When adjusted for the same level of equity (i.e. 15% of RWA), Fio banka, Stavebni Sporitelna Ceske Sporitelny and Moneta Stavebni Sporitelna would have made it to the top of the list:

Jiří Staník
Jiří Staník
CEO & Founder
He spent nearly two decades analysing companies in the region of Central and Eastern Europe, primarily in the area of financial services. Jiri built and headed Equity Research at Wood & Company, a Central European brokerage firm, and got several awards (such as The Best Equity Research or The Best Analyst by Euromoney).