“2021 was a turbulent year marked with gradual macroeconomic recovery and improving pandemic situation. I am very happy that our continuing strategic transformation to financial health company was reflected in our growing customer base and slightly improving market shares in main product lines. Strong deposit growth driven by households was followed by double-digit growth of mutual funds. We confirmed our position as the market leader in new mortgage financing with the record new volumes provided and our mortgage portfolio reached over CZK 350 billion. ČS has also strengthened its leadership as the largest corporate bank on the market as the volume of corporate loans provided surpassed the CZK 300 billion milestone. Additionally, to our strong capital and liquidity position, our financial resilience was supported by the issue of green bonds worth of EUR 500 million, proceeds of which will be used to further support our commitment to stronger and sustainable society,“ said Ivan Vondra, Česká spořitelna’s CFO in his reaction to the Bank´s FY 2021 financial results.

MAIN INDICATORS

After the subdued economic development during Q1 2021 caused by COVID-19 crisis, the Czech economy has been recovering in FY 2021, mainly due to sound household consumption which reflected tight labour market and high savings from 2020. On the contrary, foreign trade was affected by problems in the automotive industry associated with a lack of semiconductors.

As at 31 st December 2021, total consolidated assets amounted to CZK 1,641.7 bn, which meant an 6.8% increase compared to 31st December 2020. On the assets side, the growth was driven by loans to customers and financial assets reflecting investments into Czech government bonds which was partly compensated by decrease in loans to banks. The dominant driver of growth on the liability side of the balance sheet were customer deposits

The gross volume of ČS Group customer loans increased by 10.3% y/y to CZK 856.9 bn. The portfolio of retail loans amounted to CZK 549.4 bn, representing a year-on-year increase of 12.7%, driven mainly by private mortgages (+16.5% y/y). The volume of corporate loans, grew by 6.4% year-on-year to CZK 305.8 bn attributed to increase in Large Corporate (+11.6%), Subsidiaries (+13.4%) and SME (+3.2%).

Group deposits from customers grew by 7.6% y/y to CZK 1,184.5 bn attributed mainly to households (retail) deposits which rose by 11.9% y/y to CZK 900.0 bn. Group corporate deposits declined by 7.5% y/y to CZK 212.4 bn which was caused by other financial corporations, while public sector deposits increased by 8.5% y/y to CZK 72.2 bn. 

As at 31st December 2021, the total number of the ČS Group customers was 4.5 m (up by 19 thousand y/y), of which approx. 1.9 m used digital banking in FY 2021.

Equity attributable to owners of the parent stood at CZK 142.7 bn as at 31 st December 2021, which was 4.3% less than at the end of the year 2020. The total capital ratio for Česká spořitelna Group as at 31 st December 2021 reached 23.8%, well above minimum regulatory capital requirement (14.4%).

Additionally, to strong capital and liquidity position, resilience of Česká spořitelna was supported by senior non-preferred bond issuance eligible for the regulatory MREL requirement. These bonds were issued in green format in the amount of EUR 500 m and the proceeds will be used for financing of projects focused on sustainability and positive effect on the environment.

Operating result of Česká spořitelna increased by 4.4% y/y in FY 2021 to CZK 22.0 bn. Impact of COVID-19 crisis was more than offset by strong business growth supported by growing customer base.

Net interest income, the most important component of operating income, therefore increased by 6.8% in comparison with FY 2020 and reached CZK 31.1 bn. The development of net interest income was affected by growth of customer loans and deposits, supported by investments into government bonds. Net interest income was further positively influenced by interest rate hikes by ČNB (5 hikes during FY 2021 to 3.75%). Net interest margin related to interest bearing assets changed trajectory and slightly increased to 1.95% in FY 2021.

Net fee and commission income increased by 11.4% year-on-year to CZK 9.2 bn which was caused mainly by doubledigit growth of mutual funds volumes driven by substantial new sales and positive development of pension funds. Furthermore, net fee and commission income was positively influenced by higher fees from insurance products and card transactions.

Net trading result declined by 9.1% y/y to CZK 1.7 bn in FY 2021 which was mainly caused by hedging derivatives. Other operating income was negatively influenced by development of gains and losses from financial instruments measured at fair value through profit or loss.

Total operating expenses increased by 6.7% y/y to CZK 20.4 bn in FY 2021 mainly influenced by growth of personnel expenses and other administrative expenses. Increase in personnel expenses (+11.3% y/y) was driven by bonus reduction in 2020, booking of accrual for newly introduced employee share programme and impact of salary increase. Higher costs for IT, marketing and property management led to rise in other administrative expenses (+3.1% y/y) which nevertheless remained below the inflation rate. Depreciation slightly declined by 1.1% y/y. As a consequence of the above-mentioned development, cost/income ratio increased to 48.2% from 47.6% in FY 2020

Impairment result from financial instruments (i.e., creation of risk provisions and reserves for loans and advances, guarantees and commitments) reached CZK -1.8 bn in FY 2021. It meant a year-on-year creation lower by 77.6% as impact of COVID-19 on loan portfolio of retail as well as corporate is gradually fading away

Other operating result of CZK -1.7 bn consisted mainly of other income and costs not directly related to main operating activities of the Group. Worsening of other result in a year-on-year comparison was attributed mainly to nonrecurring one-offs in 2020, booking of impairment on buildings and loss from sale of financial instruments in 2021.

The overall number of active payment cards issued by ČS increased by 5.2% year-on-year and reached 3.1 m. Thereof credit cards represented 178 thousand. The volume of card transactions executed in FY 2021 with Česká spořitelna’s cards compared to FY 2020 was up by 22.1% to CZK 304.2 bn. The number of Česká spořitelna’s ATMs and transaction terminals decreased by 42 y/y to 1,783.