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Czech Banks Quarterly - 2Q2023

Jiří Staník
September 25, 2023

 Czech banks increased net profit 11.0% yoy to CZK 34.6 bil in the second quarter of 2023 and generated ROE of 19.3%.

Operating income rose 14.8%, cost to income dropped to 31.2% and banks' share of bad loans fell to 1.82%.

Ceska Sporitelna generated the biggest profit while Modra Pyramida Stavebni Sporitelna produced the smallest one.

Revenues & Margins

Czech banks reported a net profit of CZK 34,572 mil in the second quarter of 2023, up 11.0% when compared to previous year. This implies ROE of 19.3% in 2Q2023. In the last twelve months, profits rose 10.0% yoy to CZK 103,310 mil and ROE reached 14.7%.

Ceska Sporitelna generated the largest net profit in the last quarter (CZK 5,988 mil) followed by CSOB and Komercni Banka. At the other end of the scale was Modra Pyramida Stavebni Sporitelna with a reported profit of CZK 82.3 mil:

Revenues increased 14.8% yoy to CZK 67,123 mil in the second quarter of 2023:

  2Q2022 2Q2023 Change 1-6/2022 1-6/2023 Change
Revenues 58,488 67,123 14.8% 117,698 122,910 4.43%
Net Interest Income 43,482 41,858 -3.74% 85,314 82,116 -3.75%
Net Fee Income 9,453 10,008 5.87% 19,329 19,738 2.11%
Other Income 5,553 15,257 175% 13,055 21,057 61.3%
Costs 18,901 20,914 10.6% 38,275 41,406 8.18%
Staff Cost 10,993 12,205 11.0% 22,232 24,404 9.77%
Operating Profit 36,203 39,218 8.33% 72,566 70,982 -2.18%
Cost of Risk -0.078% 0.273% 0.350 pp 828% 3,237% 2,409 pp
Pre-Tax Profit 36,867 39,817 8.00% 65,337 65,825 0.747%
Net Profit Bank 31,133 34,572 11.0% 54,610 55,688 1.97%
ROE 18.2% 19.3% 1.07 pp 16.0% 15.6% -0.443 pp
NIM 1.82% 1.70% -0.124 pp 1.79% 1.67% -0.122 pp
Cost To Income 32.3% 31.2% -1.16 pp 32.5% 33.7% 1.17 pp

Net interest margin decreasing 0.124 pp to 1.70% as asset yield grew by 1.35 bp to 5.64% and cost of funding increased by 1.59 bp to 4.25%. Fees added 14.9% to total revenues and increased by 5.87% when compared to last year:

Cost Efficiency

Banks operated with average cost to income of 31.2% in the last quarter as operating costs rose 10.6% yoy. Staff accounted for 58.4% of operating expenditure with a total of 39,285 employees in the sector. Banks paid their staff 10.3% more than last year with the average monthly cost of CZK 103,557 per person:

Hypotecni Banka was the most cost efficient based on the cost to income ratio in the second quarter of 2023 (with 13.7%) and it also 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 (0.150%):

Commercial banks generated operating profit before provisioning of CZK 39,218 mil in the second quarter of 2023, up 8.33% when compared to last year. Ceska Sporitelna generated the largest operating profit in the second quarter of 2023 (CZK 6,615 mil), whilst Fio banka was operating with the highest operating margin when compared with risk weighted assets (17.9%):

Asset Quality

Provisions have "eaten" some 7.24% of operating profit in the second quarter of 2023 as cost of risk reached 0.273% of average loans. The volume of non-performing loans decreased by 9.34% qoq to CZK 76.6 bil and represented 1.82% of total loans at the end of June. Provisions covered 93.9% of NPLs, up from 80.4% a year ago:

Within the sector, J&T Banka had to create the most provisions in the second quarter of 2023 relative to its loans (4.83%) and Max banka the least (-2.53%). In terms of overall asset quality, we estimate that J&T Banka was operating with the highest share of non-performing loans, some 8.91% of customer loans at the end of June:


The three largest banks created 47.5% of sector's total profit in the second quarter of 2023, up when compared to 37.6% seen three years ago. In terms of revenue and operating profit, the trio generated 47.6% and 43.4% of the total:

Overall, Czech banks generated its shareholders an annualized return on equity of 19.3% in the second quarter of 2023 and 14.7% return in the last four quarters. When equity "adjusted" to 15% of risk-weighted assets, the return on equity would have reached 36.2% in 2Q2023 and 27.4% in the last twelve months.

Fio banka generated its shareholders the highest return in the last quarter (ROE of 41.8%) followed by Air Bank (27.8%) and Raiffeisen Stavebni Sporitelna (24.6%). When adjusted for the same level of equity (i.e. 15% of RWA), Fio banka, PPF Banka and Banka Creditas would have made it to the top of the list:

Loan Growth & Market Share

Loans increased by 2.15% qoq to CZK 4,206 bil during the second quarter of 2023. This implies an annual growth rate of 6.26% in the last 12 months:

Mortgage loans grew 4.82% yoy in the last 12 months and were up 2.00% qoq in the last quarter. At the end of June, mortgages formed 40.8% of total loans. Consumer loans increased 2.85% qoq (up 6.12% yoy) and represented 11.6% of total bank loans while corporate loans grew 2.81% qoq and were up 5.86% yoy to CZK 1,293 bil (or 30.7% of loans).

Banka Creditas has grown the fastest in relative terms within the last quarter (9.38%% qoq), followed by Fio banka and Trinity Bank. In absolute terms, however, Ceska Sporitelna the largest piece of the pie when compared to the previous quarter (CZK 48,526 mil or 54.7% of the market net increase) followed by CSOB and UniCredit Bank Czecho-Slovakia:

Overall, Ceska Sporitelna remains the largest lender with 22.7% of the market followed by CSOB with a 20.9% market share and Komercni Banka (19.0%). At the end of June 2023, most of Ceska Sporitelna's loans came from residential mortgages (43.5% of total). Corporate loans formed 37.2% and consumer loans represented a further 8.70% of the total loan book:

Deposits & Market Share

Customer deposits increased 3.12% qoq to CZK 6,832 bil during the second quarter of 2023. This means an annual growth rate of 7.75%, which is below the average growth of 7.80% we have seen in deposits in the last decade:

As partly seen above, households deposits grew 1.93% qoq and 5.70% yoy in the last 12 months and represented 51.4% of total customer deposits at the end of June 2023. Corporate deposits increased by 2.53% qoq (or 13.7% yoy) and made up 22.0% of total.

Max banka appears to have grown the fastest in deposits in relative terms last quarter compared to the next bunch of Czech banks (430% qoq), followed by Banka Creditas and PPF Banka. In absolute terms, when compared to the previous quarter, however, most new deposits went to CSOB (CZK 116,575 mil) followed by Ceska Sporitelna and Raiffeisenbank Czech Republic:

Overall, CSOB remains the largest deposit collector with a 21.3% market share followed by Ceska Sporitelna (20.9%) and Komercni Banka (16.0%):

At the end of June 2023, customer deposits in Czechia reached 90.7% of GDP, up from 77.9% seen a decade ago. Loan to deposit ratio accounted for 61.6% in Czechia at the end of second quarter of 2023, down from 62.4% a year ago and 75.2% in 2013. When comparing only household loans and deposits, the ratio was 62.7% at the end of June 2023:

Capitalization & Adjusted ROE

Czech banks operated with capital adequacy ratio of 23.0% at the end of the second quarter of 2023, up 1.39 bp when compared to the same period of last year. Sector's Tier 1 ratio reached 22.0% and equity accounted for 17.0% of loans. This is up 3.68 bp and up 0.282 bp when compared to five years ago.

Hypotecni Banka reported the highest capital adequacy ratio (52.2%) followed by Max banka (41.3%) and Fio banka. Moneta Stavebni Sporitelna and Air Bank managed to operate with relatively low capital ratios of 13.1% and 17.7%, respectively:

Fio banka achieved the highest ROE in the last three years (36.8%) followed by Moneta Stavebni Sporitelna (22.8%) and Air Bank (17.7%). When adjusted to the same level of capital (15% of risk-weighted assets), Fio banka would be the most profitable with a ROE of 97.4% in the last twelve months:

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).