Czech banks increased net profit 4.84% yoy to CZK 21,447 mil in the fourth quarter of 2023 and generated an annualized ROE of 11.3%. Operating income fell 0.364% yoy, cost to income increased to 40.4% and banks' share of bad loans fell to 1.21%. In the last quarter, Ceska Sporitelna generated the biggest profit while Modra Pyramida Stavebni Sporitelna produced the smallest one.
Revenues decreased 0.364% yoy to CZK 58,954 mil in the fourth quarter of 2023. Net interest margin declined by 0.055 bp to 1.74% of assets driven by a positive asset growth (11.0% yoy) and lower interest rates (down 29 bp to 6.97%).
Operating costs grew 11.2% yoy and banks operated with a cost to income ratio of 40.4% in the fourth quarter of 2023. With 38,941 employees in the sector, staff accounted for 56.1% of total costs. Banks paid for their staff CZK 114,158 per person/month last quarter.
Banks put aside CZK 6,082 mil in provisions in the fourth quarter of 2023. Provisions have "eaten" some 17.3% of operating profit in the fourth quarter of 2023 as cost of risk reached 0.563% of average loans. Share of bad loans decreased to 1.21% of total loans compared to last month and provisions covered 99.4% of non-performing loans.
Asset growth slowed down to -2.60% qoq and loans increased 1.56% qoq (up 7.00% yoy). Mortgages added 0.752% qoq (up 4.17% yoy), consumer loans rose 1.45% qoq (up 6.65% yoy) and corporate loans increased by 1.25% qoq (up 9.78% yoy).
Deposits dropped 3.35% qoq and rose 14.4% yoy, so loans to deposits reached 65.0% at the end of the quarter. Czech banks remain well-capitalized with Tier 1 ratio at 21.7% at the end of December 2023.
Ceska Sporitelna was the most profitable bank in the fourth quarter of 2023 with a net profit of CZK 4,036 mil, Hypotecni Banka was the most cost efficient (cost to assets at 0.138%), UniCredit Bank Czecho-Slovakia grew its loans the most (up 11.7% qoq) while Max banka had the biggest increase in deposits (12.3% qoq).
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