Czech banks increased net profit 11.0% yoy to CZK 34,572 mil in the second quarter of 2023 and generated an annualized ROE of 19.3%. Operating income rose 14.8% yoy, cost to income dropped to 31.2% and banks' share of bad loans fell to 1.82%. In the last quarter, Ceska Sporitelna generated the biggest profit while Modra Pyramida Stavebni Sporitelna produced the smallest one.
Revenues increased 14.8% yoy to CZK 67,123 mil in the second quarter of 2023. Net interest margin declined by 0.124 bp to 1.70% of assets driven by a positive asset growth (3.72% yoy) and higher interest rates (up 51 bp to 7.15%).
Operating costs grew 10.6% yoy and banks operated with a cost to income ratio of 31.2% in the second quarter of 2023. With 39,285 employees in the sector, staff accounted for 58.4% of total costs. Banks paid their staff CZK 103,557 per person last quarter.
Banks put aside CZK 2,839 mil in provisions in the second quarter of 2023. 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. Share of bad loans decreased to 1.82% of total loans compared to last month and provisions covered 93.9% of non-performing loans.
Asset growth slowed down to 2.43% qoq and loans increased 2.15% qoq (up 6.26% yoy). Mortgages added 2.00% qoq (up 4.82% yoy), consumer loans rose 2.85% qoq (up 6.12% yoy) and corporate loans increased by 2.81% qoq (up 5.86% yoy).
Deposits grew 3.12% qoq and rose 7.75% yoy, so loans to deposits reached 61.6% at the end of the quarter. Czech banks remain well-capitalized with Tier 1 ratio at 22.0% at the end of June 2023.
Ceska Sporitelna was the most profitable bank in the second quarter of 2023 with a net profit of CZK 5,988 mil, Hypotecni Banka was the most cost efficient (cost to assets at 0.149%), Banka Creditas grew its loans the most (up 9.38% qoq) while Max banka had the biggest increase in deposits (23.7% qoq).