Exports increase by 300% The Institute primarily conducts research into plant selection, genetics and seed production, increasing exports
Finance Industry 2009 A comprehensive annual review of all aspects of the Croatian finance industry and a look at the future
INTERVIEW
AGRICULTURE
FINANCE INDUSTRY
PAGES 2-3
PAGE 4
PAGE 8-19
Hido Biščević, Secretary General, Regional Cooperation Council Investment as a precondition for economic and political stability
Croatian Business & Finance Weekly Established in 1953 Monday / 26th July / 2010 Year III / No 0117 www.privredni.hr
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pvinternational pv international C R O A T I A N
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CROATIAN CHAMBER OF COMMERCE OPENS REPRESENTATIVE OFFICE IN KABUL
AFGHANISTAN WELCOMES NEW BUSINESS OPPORTUNITIES Khan Jan Alokozai thanked Croatia for sending its troops to Afghanistan as security and safety of his country. Now it is time to open the doors to econ
they have helped with the omic co-operation
Igor Vukić “
he Afghan market will open the doors to Central Asia and ensure a Croatian presence on the regional market. This process will encounter many difficulties, which will force Croatia to face up to global competition. However, entering new markets is a Croatian must”, said Nadan Vidošević, President of the Croatian Chamber of Commerce, at the recent opening of the first non-European CCE representative office, in Kabul. The office, with Stanko Dunatov as its head, is located in the Kart-e-Char residential quarters of the Afghan capital, and will share its quarters with an American security agency. The position of Vice-President will be carried out by Zvonimir Radiček. Khan Jan Alokozai, the Vice-President of the Afghanistan Chamber of Commerce and Industries, handed the work permit and described Croatian co-operation with the Islamic Republic of Afghanistan as being of significant importance. “We thank Croatia for sending their forces to Afghanistan as they have helped to ensure security and safety in our country. Now is time to open the doors to economic co-operation. We will
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encourage Afghan investors to come to Croatia as we can guarantee that our businessmen are honest and trustworthy people”, says Khan Jan Alokozai. Infrastructure projects Nadan Vidošević visited 330
Croatian soldiers, members of the 15th Contingent of Croatian Armed Forces, and thanked them for their efforts made as ISAF members. Vidošević stressed the importance of the eight years of experience and remarkable co-operation with the Afghan
Croatia a rare country with a bidding permit Croatian companies in Afghanistan have excellent business opportunities at their disposal as Croatia is just one of seven countries, including the USA, Canada, Pakistan, Tajikistan, Russia and India, to have been granted a bidding permit. The CCE has signed a Partnership Agreement with the Afghanistan Chamber of Commerce and Industries which ensures Croatian applications in any bidding. The CCE rôle is to provide all types of information related to business opportunities and security issues as well as to organise exchanges of business partners, clarify bureaucratic procedures, establish business contacts as well as provide help related to entering the local market.
people, which has served as an excellent basis for future economic co-operation. “With all due respect to the European market, Croatia needs to turn to other international markets rapidly. These markets do not include merely Central Asia, China, India, Brazil, Russia and numerous Arab countries but a whole range of alternative markets, especially those within NAM”, promotes Vidošević. Afghanistan could prove a good starting point for such a plan, since it is a member of Central Asian Organisation for Economic Co-operation and Development, covering a market of 400 million inhabitants from Turkey to India. Afghanistan itself could also provide many excellent business opportunities. Stanko Dunatov, Director of the CCE representative office in Kabul, has been working in Afghanistan since 2000 as the owner of a construction and logistics services company. He points out the current state of affairs provide the most appropriate opportunity to enter the Afghan market, as many new infrastructure-related projects will be developed, especially in the areas of road and bridge construction, water supply and drainage systems as well as electric supply production and supply.
2
Privredni vjesnik Year III No 0117
TOMISLAV ŠMUC, PH.D., DIVISIONAL HEAD, ELECTRONICS, RUĐER BOŠKOVIĆ INSTITUTE (IRB)
Hido Biščević, Secretary General, Regional
Inadequate funding for science
INVESTMENT ECONOMIC AN
The most significant problems the Institute currently faces relate to regulation as well as a lack of support and encouragement for participation in EU projects hen compared with other areas of industry, electronics and computing have always faced a more pronounced labour turnover. As this particular area has required a highly qualified labour force for decades, both in Croatia and worldwide, young experts have always had more employment options at their disposal, no matter whether they opted for a scientific career or industry-related positions. The Ruđer Bošković Institute should play a crucial role in shaping independent research-and-development experts for the industrial sector as well as future Faculty scientists and teachers. As younger employees and junior researchers earn on average €685 nett, I believe that income for scientific and research related jobs to be incentive enough as other industrial-related jobs in Croatia do not provide such opportunity. Hence, scientific work at IRB is believed to be a sound choice. However, when considering electronics, computing and ICT, the industry sector offers a higher-than-average starting income for young experts. Hence, if they are not interested in a scientific career, it is not expected they would opt for the position of a junior researcher. However, young foreign experts choose this path as, when they earn their doctor’s degree at one of the prestigious institutions, they are likely to receive a higher salary and greater status than their peers working in industry, which is not the case in Croatia.
Biščević believes that two encouraging facts are currently b funded by European Commission and EU institutional bank
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IMPRESSUM: Privredni vjesnik Kačićeva 9 10000 Zagreb +385 1 5600020 uprava@privredni.hr www.privredni-vjesnik.hr/ subscription
Zdravko Latal arlier this year at the RCC workshop in Sarajevo, Hido Biščević, Secretary General of the Regional Cooperation Council and one of the most experienced Croatian diplomats, expressed his hopes that Balkan and South Eastern European countries could show a slight recovery from the global financial crisis only in the second half of 2010, although more optimistic trends were to be expected not before 2011. The question is whether Mr Biščević still holds the same opinion after the first two quarters of 2010 have elapsed.
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On the other hand, average income is not the most significant problem IRB has to face. Problematic regulations and a lack of support and encouragement for participation in EU projects are of much greater importance, as well as the fact that employing new junior researchers and science-related funding will be the first to face the down-sizing and budgetary consequences of the global financial crisis. Research related to the technical industry and natural sciences in Croatia are inadequately funded, thus significantly influencing the employment rate. The number of students of Humanities has doubled over the last 15 years whereas professions related to the technical industry and natural sciences have been stagnant. However, it is a well-known fact that some economic studies, conducted by western countries, have proved that the number of students at technical and natural science faculties is one of the key indicators of economic development in a particular country.
FOR PUBLISHER Nikola Baučić +385 1 4846661 uprava@privredni.hr
IMC MANAGER Dea Olup +385 1 5600028 olup@privredni.hr
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COUNSELLOR, INTERNATIONAL OPERATIONS, LANGUAGE EDITOR Ray Fletcher fletcher@privredni.hr
The global financial crisis has caused problems so deep that, unlike two months ago, I am much less optimistic when considering the possibility of even slight recovery in economic trends. The consequences of the global financial and economic crisis affected this particular region unlike any other part of Europe as these same consequences reflect in the structural economic problems of individual countries as well as revealing deep problems and disadvantages of post-transitional SE European economies. Individual governments have been forced to face up to their problems in reaching the most effective economic solutions, either by introducing savings measures or incentives. They mostly opted for the first solution and budgetary restrictions and much less for encouraging production and individual consumption. Political circumstances have only contributed to an escalation of existing problems. It is impossible to neglect the fact that the global financial crisis affected SE Europe, especially the countries of former Yugoslavia, at the worst possible
moment when these countries started to show the first signs of economic growth. Can it therefore be concluded that any growth was restrained from its inception? Before the global financial crisis occurred, this had been one of the fastest growing economic markets with high rates of investment. Not only has economic growth been brought to a halt, but certain political problems have also re-emerged. Both politics and the economy had shown a slight resurgence, with a certain degree of probability of finding a solution in the not too distant future. Current trends raise complex questions on the circumstances and perspectives
Before the global financial crisis, this was one of the fastest growing economic markets, characterised by high rates of investment. Regrettably it has vanished in a short period of time
in the wider region. The Regional Cooperation Council as well as 12 heads of states and governments, who attended the summit in Istanbul, expressed their awareness of the fact that increased mutual cooperation would be necessary if adequate solutions to the global financial crisis were to be found. Representatives of individual governments understood that they have to think globally if individual country problems are to be solved. I am deeply concerned by increasing political problems
www.privredni.hr Business & Finance Weekly
INTERVIEW 3
Cooperation Council
AS A PRECONDITION FOR ND POLITICAL STABILITY
eing developed: regional countries are trying to reach mutual agreement and negotiations on new projects, partially s, have already been launched
within the region as they significantly jeopardise any advantages that regional cooperation may offer in solving financial difficulties. What steps are currently being undertaken at an international level in order to support the recovery of regional countries? Various experts believe that individual governments are too preoccupied with their own problems to help their neighbours. I do not think that the global financial crisis is currently being solved at an international level. Without further investment into the economy, political stability is unreachable. Unless this part of Europe solves its political disputes and boosts its economic activities, both economic and social lethargy is the only option. Some scenarios foresee alarming tendencies such as populism and a decrease in democratic capabilities. However, regional countries are trying to reach mutual agreement, with negotiations on new projects, partially funded by the European Commission
and EU institutional banks, have already been launched. Hopefully by this autumn, major regional infrastructural projects will be formalised, including the navigability of the Sava, the construction of a 400 kilovolt power-transmission line between Macedonia and Albania as well as various projects related to the power industry and transportation. Further investment into economic and social projects will ensure the stability of this part of Europe. I am convinced that European institutions and banks above all should be interested in providing funds for such projects. In addition, these and similar projects are considered as the most appropriate incentive for individual legislatures to adopt the necessary changes on their way to EU accession. On the other hand, the European Commission will implement its strategy for the following three years, relating to the power supply industry, infrastructure, transport, water supply system, environmental protection, education and many others.
How would you describe your cooperation with the “new� CEFTA, as some of its members have not given a positive opinion on its new programme? It has not ensured a more significant capital flow and joint entrance to third markets. On the contrary, trade wars, caused by non-tariff barriers among its
SE Europe should reflect current political relations, which is one of the Council’s responsibilities. Personally, I am not happy with CEFTA role in strengthening mutual economic relations, for which I can name several reasons. I believe that the potential of CEFTA was not fully used before the global financial crisis due to the differing political mentalities of individual governments. This particular region is still governed by political aversions not only amongst particular countries but also within particular borders. In addition, the financial crisis encouraged the introduction of protectionist measures and the closure of national markets. When speaking of specific cases, Pristina-Belgrade relations significantly aggravate CEFTA activities. A more disconcerting fact is that Pristina will take over the CEFTA presidency in the following year and if significant changes do not take place, only further complications can be expected. These topics were widely discussed at the Istanbul summit. CEFTA obviously needs a new incentive and
Pristina-Belgrade relations are significantly aggravating the implementation of CEFTA policies. A more disconcerting fact is that Pristina will take over the CEFTA presidency in the following year members, have become a commonality. The Regional Cooperation Council cannot directly influence CEFTA activities. However, the circulation of goods, capital and services in
a more resolute approach. This debate will be opened both by the European Commission and CEFTA Secretariat with the full support of the Regional Cooperation Council.
4 AGRICULTURE U TU
Privredni vjesnik Year III No 0117
21.4% sales increased ( in local markets
AGRICULTURAL INSTITUTE OSIJEK (PIO) OPENS A NEW SCIENTIFIC RESEARCH UNIT IN TURKEY
EXPORTS INCREASE BY 300% The Institute primarily conducts research into plant selection, genetics and seed production of the most important standard cultivars and hybrids within a regional market expanding to Turkey, Iran and Asia Svetozar Sarkanjac f the operating results of PIO for the first five months of 2010 could reflect on the entire Croatian economy, it would presumed that Croatia is a land of prosperity, based on excellent co-operation between science and the economy. In the first five months of 2010, PIO has increased seed sales locally by 21.4% and exports have shown an increase of 300% when compared with 2009. However, these excellent business results have not been achieved in a short period. The Agricultural Institute Osijek, founded in 1878, has developed into
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a highly renowned, top-quality scientific and research institute, permanently employing 157 individuals. The Institute primarily conducts research related to plant selection, genetics and seed production of the most important standard cultivars and hybrids. In addition, further development and the application of up-to-date laboratory techniques and analyses as well as additional research into fruit growing, agricultural technology and soil improvement are a constituent part of the Institute’s scientific research. According to PIO Director Zvonimir Zdunić, Ph. D., the Institute has significantly influenced and improved Croatian agricultural production, as evinced by the fact that its selection has been highly represented among cultivars planted locally.
For example, PIO wheat has been used for some 60% of all Croatian wheat production. The ever-growing popularity of PIO products has been astounding and it now enjoys a 90% share of alfalfa, 80% of peas intended for livestock, 70% of soya,
65% of barley and 20% of corn. Foreign markets captured The PIO range has been widely exported to countries such as Slovenia, Hungary, Bosnia and Herzegovina, Serbia, Kosovo and Macedonia, with significant success also achieved in Iran and Turkey. “PIO has co-operated closely with Near Eastern countries since the end of 1990’s. Hence, a scientific research unit has been opened in Turkey whose facilities are used to develop cultivars and hybrids adapted to arid climate and specific production technologies characteristic for the countries of the region. This co-operation, which was, in its infancy, solely for the export of prepared seed, mostly corn, has expanded into local seed production in Turkey. The new scientific
research unit is the jewel in the crown, as it develops not only corn hybrids, but also wheat, barley and alfalfa cultivars”, outlines Zdunić. “In order to further expand our business activities in Turkey, we are currently negotiating the
start-up of several experimental orchards. Thus, one product opens the doors for others and we may proudly say that PIO is the only Croatian public institute to have achieved such a level of success, which naturally, has not occurred overnight. We have not only invested 10 years of hard
PIO will continue its scientific programmes and business activities in Asia as Croatian standard cultivars and hybrids have adapted well to the local climate work but have always been looking to implement our best ideas. For a serious business, there is no such thing such as unexpected success”, he adds. Asia final frontier PIO development plans include projects in the expanding Iranian market, where the Institute has been present for eight years. The market of Turkmenistan is also to be opened, with preliminary contact already having been established in Ashgabat. Both sides expressed their sincere wish to maintain future cooperation, with follow-up visits encouraged by the Turkmenistan Ministry of Agriculture. “In any case, our scientific projects as well as further activities in the Asian market will be developed over the years to come, due not only to the fact that Croatian cultivars and hybrids are genetically adapted to local climates but also the potential financial growth of the local markets”, concludes Zvonimir Zdunić.
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€0.16¢ per kg (
Croatian farmers expect for wheat
550,000 tonnes ( Croatia requires annually
CALL PRICE OF WHEAT
Better prices yet to come Farmers should not sell their wheat yet as its price is expected to increase. However, as most farmers should receive their first income from wheat and usually have nowhere to store it, 2010 will not see a higher income Krešimir Sočković very July, farmers want the answer to one question – how much they will receive per kilogramme of crop. This year is no exception. With farm and cultivator representatives on one side and the baking and food processing industry on the other, negotiations are currently being held with the co-operation of the Ministry of Agriculture, Fisheries and Rural Development. In reality, the industry will reach a final decision, with the Ministry offering only mediation services. Naturally, farmers expect to make at least a small profit on wheat, as its cultivation usually leads them to serious indebtedness. In addition, during summer farmers should receive their first income from wheat. On the other hand, industry representatives are aware of the fact that farmers have nowhere else to go. Hence, the industry only needs to wait and eventually offer a low call price which they promise to pay comparatively quickly.
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This year the harvest may well fail as it is not expected to surpass 450,000 tonnes, half the amount of 2009 The UN and similar institutions forecast food prices, including cereals, to increase by more than 40% by 2015. The Croatian market still shows no such tendency. Data published by the Central Bureau of Statistics at the beginning of 2007, showed the price
of cereal crops increased by 80% over 2005. At harvest time, prices increased by only 30% although at the end of the year the price increased by an astonishing 130%, only to show a fall-off at the end of 2008. In 2009 the price fell below that level maintained five years earlier. Confused expectations Croatian farmers may expect to earn €0.16¢ per kilogramme. They are convinced the price for wheat will increase as the harvest is expected to fail, amounting to no more than 450,000 tonnes, half the amount harvested in 2009 when it totalled 903,000 tonnes. It is estimated that Croatia requires some 550,000 tonnes annually. With the exception of Ivica Čapo, manager of Žitni terminali, who offered €0.12¢ per kilogramme, no other industry representative has suggested a final call price to date. Stjepan Kunovac, president of the Association of Central Croatian Agricultural Producers, adds that Podravka was the only company to have confirmed offering the most reasonable final price. However, Podravka management have announced they
intend to purchase 18,000 tonnes from local manufactures at €0.14¢ per kilogramme. Agrokor, one of the largest buyers in 2009, announced that they are not interested in the current harvest as they still manage some 200,000 tonnes, purchased last year. Local farmers are dissatisfied with the current price as the Budapest Commodity Exchange offers more than €0.14¢ whilst French and Italian farmers may expect up to €0.19¢ per kilogramme. Viktor Pfeifer, president of the Farmers’ Association, believes the major problem lies in the fact that the starting price has not yet been announced. “All silos are privately owned, which opens the door to monopoly. Two weeks ago, Agrokor management announced having 125,000 tonnes in stock, whereas the most recent data shows an amount of 200,000 tonnes. Such a monopoly almost always reduces the final price”, says Pfeifer. Farmers believe that even if wheat was to be imported from Hungary, its final price, customs duties and transport included, would be at least €0.16¢. Matija Brlošić, president of Brazda Association, believes that, despite being recommended
to wait, the current situation forces smaller farmers in Slavonia to sell their wheat at lower prices, as they owe large sums of money. Prices to increase Although Petar Čobanković, Minister of Agriculture, and representatives from the milling and baking industry have taken no official stand on the final wheat price. Žitozajendica, whose members hold more than 80% of the Croatian market for related products, has been clear; it is not the industry which determines the final price, but the market. It would be better if farmers could wait and decide to sell wheat later, as prices are expected to increase. However, as most of the farmers should receive their first income from wheat and usually have nowhere to store it, it is expected that again this year many will not earn as much as expected. Farmers have two options: either to significantly increase production and yield per hectare, which, in 2009, remained within the international average of an unsatisfactory 5 tonnes per hectare, or to turn to more work intensive and profitable crops.
6 WE PRESENT HANGAR 7, ZAGREB
Privredni vjesnik Year III No 0117
ZEBRA, PIVARE
Zipped curtains as protection A branded product with unauthorised production representing a potential criminal offence lobal climate change often throws up interesting innovation. An Australian company Ziptrak several years ago developed zip curtains with springs. This is a specific type of vertical screening for roofed spaces, providing protection from exterior elements, such as sun, wind, rain, insects, neighbours or noise. This product is relatively new to the European market. Therefore, Antun Bubić founded Zebra in January of this year. With its manufacturing plant based in Pivare Zebra does not only manufacture, but also represents and sells Ziptrak products both in Croatia and worldwide. As these curtains have been branded, their unauthorised production represents a potential criminal offence.
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Campaigning and promotion Ivana Vukelić identified the disadvantages of other companies and turned them to her advantage
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our major goal is to provide a complete service which is better than the average product” outlines Vukelić.
One of the most significant negatives is an uncertain client who is not open to suggestions
A comprehensive list of clients Hangar 7 co-operates with several specialised companies, such as Blink Vision, which provides technical support, as well as Nmedia with which Hangar 7 is currently developing interactive presentation products, the first of which will be available from autumn 2010. The list of Hangar 7 clients is comprehensive. “One of the most significant disadvantages is when the client is unsure of their needs and, in addition, is not open to suggestions, as it is easier to work with those with vision”, stresses Vukelić. As the competition in this particular area is more than fierce, promptness, innovation and competitiveness are prerequisites. However, as with any other business, payment is of overriding concern. “In addition, many companies do not welcome change easily. Although the situation is improving slightly, it is somewhat difficult to persuade clients that trying something new in order to be noticed is basically a priority. Despite several bright examples, many companies still apply out-of-date methods”, concludes Ivana Vukelić. (K.S.)
t is hard to imagine the organisation of almost any major business event without young ladies and gentlemen who do not only welcome visitors with a smile, but provide information and organisational help as well being able to address any current problems. A young entrepreneur decided to use her personal experiences in this area and create a company providing such services. “I decided to enter this business as my personal experience provided me with an insight into both the advantages and disadvantages”, notes Ivana Vukelić, owner and director of Hangar 7.
“I realised I could do much more through managing to recognise the disadvantages other companies face and to use them to my advantage. The rest is, so to say, history”, she adds. Hangar 7 was founded in 2008 and has achieved steady growth, despite the global financial crisis. “My company can be described as flexible and innovative. Although our primary activities relate to marketing and promotion,
Curtains reduce energy waste “Zebra is moving ahead to take up its position on the Croatian market as competition never rests. However, it is precisely that competition which makes us determined to make Ziptrak products a standard inventory in any household, catering or industry facility” says Bubić. In addition to the production of Ziptrak curtains Zebra is currently developing additional plans related to the development of eco-tourism and catering facilities. The constructed zipped curtains require no additional fastenings. However, according to Bubić, the local market still lacks quality curtains, which would not only provide protection from exterior elements throughout the year but would also reduce energy waste. Raw materials for the curtains are acquired from Australia, solar fabric is manufactured in Swit-
zerland and the PVC foil comes from Japan. Zebra management organises partnership relations with various Croatian companies, responsible for finishing, installation, mainte-
n a n c e , sales and dealership.Bubić stressed that Zebra is still a young company but with a bright future. Since its creation, management has taken a firm stand towards debt settlement, in that any financial obligations towards the government and others are paid on a regular basis. Hence, they anticipate that all financial claims to Zebra to be also paid on time. Zip curtains are not mass produced and raw materials are quite expensive. As a result the company does not accept any deals
Their construction requires no additional fastenings in which they could lose money. “Opening new areas and acquiring new business partners as well as the revival of western Slavonia in terms of eco-tourism and catering facilities are all included in the long-term plans of our young but ambitious company”, concludes Bubić.
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CROATIAN FOREIGN CURRENCY MARKET Currency
AUD CAD JPY CHF GBP USD EUR Source: HNB
Kuna exchange mid-rate
EUR
7.22
4,884759 5,317855 6,374373 5,333986 8,570395 5,560247 7,209416 WEEK JULY 10, 2010
USD
5.80
14.7.
15.7.
16.7.
5.42
7.21
5.74
5.40
7.20
5.68
5.38
7.19
5.62
5.36
7.18
5.56
5.34
7.17 13.7.
CHF
17.7.
5.50 13.7.
14.7.
15.7.
16.7.
HBOR (CROATIAN BANK FOR RECONSTRUCTION AND DEVELOPMENT)
17.7.
5.32 13.7.
14.7.
15.7.
16.7.
17.7.
::: news Ericsson Nikola Tesla deal worth €3.7 million Ericsson Nikola Tesla has signed new contracts for business operations in the Russian Federation, Belarus, Moldavia, Kazakhstan and Georgia, worth more than €3.7 million. Contracts were signed both with mobile phone and landline operators, long-standing partners of Ericsson Nikola Tesla, and will cover the modernisation and expansion of mobile networks and landlines as well as to provide business users with IP service.
INCREASE IN CREDIT ACTIVITY
Data for the first half of 2010 shows HBOR approved 46% more loans when compared with the same period of 2009 Boris Odorčić ata for the first half of 2010 shows that the Croatian Bank for Reconstruction and Development has approved loans worth €0.63 billion, an increase of 48% over 2009. In addition, the first two quarters of 2010 noted an increase in the actual number of HBOR approved loans, a total of 946, a 46% increase when compared with the same period in 2009. The total amount of approved loans for 2009 totalled slightly over €0.84 billion. During the recent presentation of HBOR business results, Anton Kovačev, President of Managing Board, pointed out that most of newly approved loans related to incentives to exporting companies as well as for businesses fac-
D
ing illiquidity. More significant is the fact that for the €13.69 million of funds invested by HBOR, investors added a further €23.29 million. Kovačev added such investment not only improved liquidity, but positive effects may be expected as soon as 2011. Businesses and commercial banks are very much oriented towards solving the problems connected with current liquidity as well as refinancing current loans. This is very much observable in the fact that the first four bids for HBOR loan allocations as part of the Programme for Financing Permanent Working Capital, have proved to be successful. HBOR has approved €69.69 million for Model A, with €42.66 million already allocated. Its
more considerable influence on the liquidity of Croatian business is not expected in the short term as the programme foresees the funds being used within six months, starting from the date of contract closure. Since most applications related to Model “A”, Kovačev believes this Programme has already shown its beneficiary effects. In addition, HBOR has recently reached agreements with several international financial institutions, worth some €384 million. “Finance has been acquired under the same terms which were valid before the global financial crisis. Thus, interest rates for economyrelated loans will be between 2% and 6%”, confirms Kovačev.
INA debt repaid to government
Zoltan Aldott, the Head of INA Board of Directors, stated in an interview for the business weekly Lider that INA has repaid all debts to the government, whilst €1.1 billion is owed to banks and a further €0.27 billion to its coowner Mol. In order to restructure the total debt, INA will have to incur further debts and issue convertible bonds. The money raised will be used for new investment, worth this year around €0.55 billion, according to Aldott. HAMAG and HPB loans for micro entrepreneurs HPB (Croatian Postal Bank) has signed a contract with HAMAG (Croatian Agency for Small Enterprises) to provide micro loans to entrepreneurs. Individual loans with a repayment period of five years may not exceed €27,400 and HAMAG will guarantee up to 70% of debt principal coverage. HPB is the first bank to join the HAMAG programme to provide micro loans.
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FINANCE INDUSTRY
Privredni vjesnik Year III No 0117
CROATIAN BANKING 2009
GREAT CAUTION REQU
As the effects of the global financial crisis will be felt throughout 2010, GDP growth will remain negative in trend whilst bad loans will trend upwards in the year to come Žarko Primorac oth the general public and experts consider the Croatian banking system to be stable and well capitalised. Bank assets in 2009 grew at a rate of 2.30%, which is significantly lower than in 2008.
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The assets of all major banks, with the exception of Raiffeisen (-2.16%) and HPB (-4.75%), grew at approximately similar, but rather low rates. When considering that Croatian GDP decreased by 5.8%, the total increase in bank assets may be deemed to be satisfactory. How-
ever, a detailed analysis shows more significant problems, since bank lending has shown a miserly increase of 1.80%: 23.72% to government and 3.15% for the economy in general, whereas loans to the general public actually fell by 2.44%. This ratio shows that the public treasury
was the primary user of the total loan increase. An increase in the level of bad loans Whilst the total number of new loans decreases, the share of bad loans increases, showing a 7.6% rate in 2009 with more than a
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UIRED IN THE FUTURE slight chance of reaching 9% in 2010. A high percentage of bad loans represent one of the major loan related risks, tightly linked with a healthy real sector and solvency. It seems that the current banking situation shows a tendency towards negative trends as follows: increase in risk – less new loans; lower economic activity – more bad loans; increase in interest rates –increase in risk. Breaking this vicious cycle is one of the preconditions which should solve the global financial crisis. This aspect in particular,
relates to the Croatian economy due to negative GDP growth trends as well as too high illiquidity rates. The general public,
Croatian banks are well capitalised, which is one of the preconditions for their stability government and banks must find their way out of credit crunch as each will feel its negative consequences.
The total growth rate of bank deposits in 2009 was negative, amounting to -0.1%, bearing in mind that economic deposits decreased by 7% whilst personalrelated deposits increased by some 4.5% year-on-year. It is estimated that deposits will increase between 2.5% and 4.2% in 2010 and 2011 respectively. Low growth rates related to bank deposits reflect low economic liquidity as well as a reduction in solvency. However, these sectors do not demonstrate the same tendencies: economic deposits de-
crease radically due to extremely low economic liquidity, whereas savings related to the general public show steady growth. Solid capitalisation Croatian banks are well capitalised, which is one of the preconditions for their stability. When considering their capital adequacy ratios, as one of capitalisations more distinctive features, Croatian banks, with a 15.8% ratio in 2009, are considered as one of better capitalised banking structures in Central Europe. Solid capitalisa-
Top 10 in past ranking (numbers represent scale changes) Bank /Year ZAGREBAČKA BANKA PRIVREDNA BANKA HYPO ALPE-ADRIA-BANK ERSTE UND STEIERMÄRKISCHE BANK RAIFFEISENBANK SG - SPLITSKA BANKA VOLKSBANK OTP BANKA HRVATSKA POŠTANSKA BANKA MEĐIMURSKA BANKA SLAVONSKA BANKA ŠTEDBANKA KARLOVAČKA BANKA CROATIA BANKA VARAŽDINSKA BANKA RIJEČKA BANKA SPLITSKA BANKA DUBROVAČKA BANKA RIADRIA BANKA DALMATINSKA BANKA ISTARSKA BANKA BJELOVARSKA BANKA PROMDEI BANKA GLUMINA BANKA
2009. 2008. 2007. 2006. 2005. 2004. 2003. 2002. 2001. 2000. 1999. 1998. 1997. 1996. 1995. 1994. 1993. 1992.
1 2 3 4 5 6 7 8 9 10
1 2 5 4 3 6 8 9 10 13 7 16 17 23
1 2 3 5 4 6 8 9 10 11 7 12 16 22
2 1 6 4 3 5 10 9 8 12 7 11 14 18
1 2 4 5 3 6 10 9 8 12 7 11 23 16
Notes: - Nova banka - formed by the merger of Dalmatinska, Istarska and Sisačka banka - Erste und Steiermärkische Bank in fact Riječka banka which changed its name - HVB Bank Croatia merged with Splitska banka and changed its name to HVB Splitska banka - Riadria banka incorporated to Privredna banka - Varaždinska banka incorporated to Zagrebačka banka
1 2 5 4 6 3 13 8 9 11 7 10 25 14
1 2 6 3 5 4 15 10 8 16 9 11 33 17 7
13 12
1 2 7 9 4 12 24 8 11 19 10 13 34 18 6 3 5 14 16
1 2 9 6 4 11 30
1 2 11 6 7 10 32
1 2 12
1 2 12
1 2 34
2 1
1 2
7 10 33
7 11 35
13
16
29
7 18 8
9 15 12 18 40 20 5 3 4 23 16 8 13
6 16 8 21 43 13 4 3 5 14 17 11 40 9
4 17 8
4 21 11 26 19 8 5 6 7 3 16 9 20 14 18 10
38 17 11 20 14 7 5 3 4 6 9 10 15 22 8 12
39 14 9 19 10 5 4
38 17 5 13 3 21 15 10 23
36 5 3 6 14 9 25 10 16
11 7 8 3 17 6 13
1 2
2 1
2 1
39 22 5
20 25 7
15 18 7
11 9 8 3 4 13 7 12 6 23 10
12 8 6 3 5 22 10 9 11 16 31
10 11 6 3 4 8 9 5 16 26
- Dubrovačka banka incorporated to Nova banka - Nova banka changed its name to OTP banka in september 2005. - HVB Splitska banka changed its name to Societe Generale - Splitska banka 30. 6. 2006. - Slavonska banka 1. 3. 2009. incorporated to Hypo Alpe-Adria-Banci
10 FINANCE INDUSTRY
Privredni vjesnik Year III No 0117
Rating Croatian banks in 2009. Ranking
Core capital Bank
2009.
2008.
1
1
Zagrebačka banka
2
2
3
000 kn
%
change
000 kn
14.110.552
9,14
1.2
Privredna banka Zagreb
8.875.861
14,24
1.9
5
Hypo Alpe-Adria-Bank
6.153.911
37,08
5.9
4
4
Erste und Steiermärkische Bank
5.243.180
11,46
1.6
5
3
Raiffeisenbank
5.207.699
2,12
3.7
6
6
Societe Generale - Splitska banka
3.179.779
12,05
4
7
8
Volksbank
1.698.652
4,76
1.5
8
9
OTP banka
1.498.402
6,29
9
9
10
Hrvatska poštanska banka
615.830
-31,87
6
10
13
Međimurska banka
371.026
17,36
1
11
11
Jadranska banka
370.846
0,38
2
12
12
Podravska banka
334.627
0,34
2
13
15
Veneto banka
284.360
-5,64
2
14
16
Štedbanka
262.512
0,00
2
15
21
Kreditna banka Zagreb
262.456
65,11
2
16
14
Banco Popolare Croatia
238.913
-19,06
2
17
18
Istarska kreditna banka
222.401
5,13
1
18
23
Croatia banka
204.600
0,00
2
19
17
Karlovačka banka
192.525
-9,67
1
20
19
Centar banka
186.593
2,35
1
21
20
Partner banka
165.137
2,48
22
22
Slatinska banka
164.611
10,70
23
24
VABA
141.657
9,06
1
24
25
Credo banka
133.100
0,00
1
25
26
Banka Kovanica
100.390
-17,27
1
26
27
Imex banka
96.977
0,00
27
28
Samoborska banka
84.871
5,44
28
29
BKS Bank
73.493
0,00
29
31
Banka Brod
54.435
23,29
30
30
Banka splitsko-dalmatinska
52.266
-1,83
31
33
Nava banka
41.079
90,78
32
32
Primorska banka
32.835
-18,69
-
7
Slavonska banka
-
-
-
A štedna banka malog poduzetništva
15.000
-
9.767
-30,11
34 Source: Data press
Obrtnička štedna banka
www.privredni.hr Business & Finance Weekly
11
Equity capital %
change
Capital adequacy ratio
Ranking
Assest 000 kn
%
change
Profit after taxes
Ranking
280.968
0,00
6
19,09
92.812.095
3,83
1
1.216.000
907.477
0,00
3
17,37
64.519.488
1,22
2
926.580
959.830
42,34
1
20,21
38.764.907
46,23
5
151.415
698.418
0,00
4
12,41
48.940.570
7,40
3
606.969
711.132
0,00
2
15,01
39.499.095
-2,16
4
407.896
491.426
0,00
9
12,31
27.620.857
0,76
6
312.475
530.668
0,00
5
24,62
7.640.212
-0,10
9
44.412
989.607
0,00
7
13,37
12.545.023
-1,95
8
88.647
654.320
11,89
8
10,13
13.985.623
-4,45
7
(448.015)
127.900
0,00
22
18,47
2.822.455
-0,69
10
47.312
239.246
0,00
14
17,65
2.281.806
-3,07
12
26.953
267.500
0,00
11
15,80
2.756.942
-0,96
11
12.124
284.360
0,00
10
33,02
941.444
10,98
26
(34.262)
250.000
0,00
13
21,43
1.138.089
-0,01
24
23.516
230.200
74,40
15
16,13
1.647.005
10,85
17
12.187
260.980
0,00
12
12,41
2.050.728
6,66
15
(57.189)
162.800
0,00
19
12,59
2.247.843
0,49
13
21.312
204.600
0,00
16
10,76
1.770.415
-2,97
16
(53.499)
135.000
0,00
21
11,12
2.110.533
5,79
14
(20.477)
138.700
0,00
20
11,86
1.408.867
7,31
19
9.014
89.100
0,00
25
14,10
1.257.150
-2,02
21
6.041
91.897
0,00
24
16,24
1.084.994
1,19
25
5.753
176.523
15,11
18
12,48
1.209.515
-13,05
22
5.105
120.032
0,00
23
10,51
1.445.324
9,40
18
1.910
188.004
0,00
17
15,43
1.201.256
15,11
23
(21.501)
60.127
0,00
27
11,55
1.334.118
19,25
20
3.851
51.933
2,48
29
37,28
365.353
-7,87
29
2.563
60.000
0,00
28
14,15
616.601
38,66
27
671
51.228
24,47
30
14,34
491.544
24,69
28
4.230
48.602
0,00
31
25,45
226.356
12,73
31
1.087
42.698
-29,59
32
12,39
326.691
-10,90
30
(7.984)
60.762
0,00
26
38,08
152.148
11,80
32
(7.718)
-
-
-
-
-
-
-
-
15.000
-
82,22
21.359
-
(4.857)
18.403
0,00
12,93
134.496
-3,29
(4.210)
12 FINANCE INDUSTRY Ranking: Profit before tax Bank
Privredni vjesnik Year III No 0117
Ranking: Authorised loans
2009. % change (000 kn) 2009/2008
1 Zagrebačka banka
1.515.000
-12,88
2 Privredna banka Zagreb
1.099.916
-17,44
3 Erste und Steiermärkische Bank
758.605
-22,99
4 Raiffeisenbank
498.098
-17,04
5 Societe Generale - Splitska banka
400.306
15,10
6 Hypo Alpe-Adria-Bank
200.887
8,20
7 OTP banka
111.005
8 Volksbank
Bank
2009. % change (000 kn) 2009/2008
1 Zagrebačka banka
64.175.000
7,21
2 Privredna banka Zagreb
43.821.109
-1,77
3 Erste und Steiermärkische Bank 34.017.031
8,98
4 Hypo Alpe-Adria-Bank
29.013.611
46,51
5 Raiffeisenbank
25.793.810
-3,61
-40,07
6 Societe Generale - Splitska banka 18.949.684
0,56
59.651
-36,66
7 OTP banka
8.710.517
-1,54
9 Međimurska banka
59.650
-6,77
8 Hrvatska poštanska banka
8.426.974
1,67
10 Štedbanka
34.358
-35,53
9 Volksbank
6.220.944
-7,76
11 Jadranska banka
33.704
-19,48
10 Međimurska banka
1.832.682
0,97
12 Istarska kreditna banka
26.665
-24,25
11 Podravska banka
1.586.593
-19,14
13 Kreditna banka Zagreb
15.663
3,69
12 Banco Popolare Croatia
1.516.269
9,95
14 Podravska banka
15.353
-35,78
15 Centar banka
11.389
-31,11
13 Istarska kreditna banka
1.452.423
0,21
16 Slatinska banka
7.667
-36,58
14 Karlovačka banka
1.378.968
3,99
17 Partner banka
7.406
79,71
15 Jadranska banka
1.209.587
3,16
18 Banka Brod
5.350
-1,42
16 Credo banka
1.179.674
11,30
19 VABA
5.105
-
17 Croatia banka
1.141.991
-2,16
20 Imex banka
5.009
-48,02
18 Kreditna banka Zagreb
1.083.374
14,24
21 Samoborska banka
3219
-52,42
19 Centar banka
1.080.305
11,72
22 Credo banka
2.563
-48,12
20 Štedbanka
874.968
3,28
23 Banka splitsko-dalmatinska
1.429
0,35
21 VABA
853.601
-0,36
798
-
22 Partner banka
849.501
-7,38
23 Imex banka
845.593
11,39
24 Slatinska banka
690.582
2,88
-
25 Veneto banka
441.628
-21,20
289.718
8,46
24 BKS Bank -
Primorska banka
(7.718)
-
-
Nava banka
(7.984)
-
-
Karlovačka banka
(20.477)
-
-
Banka Kovanica
(21.501)
tion is characterised by several additional factors, such as capitalactive ratio, which, at the end of 2009, stood at 13.5%. However, one should bear in mind that the banking system is somewhat vulnerable during any financial crisis, providing the context for profitability as the main buffer for any potential jeopardising of capitalisation. Total bank income in 2009 increased by 2.16% but total costs increased steeply by 7.37%. Due to reduced income growth rate
Structure of assets financial sector 100%
-
Veneto banka
(34.262)
-
-
Croatia banka
(53.499)
-
27 Banka Brod
235.313
12,91
-
Banco Popolare Croatia
(57.352)
-
28 Nava banka
225.924
-8,73
-
Hrvatska poštanska banka
(448.015)
-
29 Samoborska banka
164.475
-23,06
85%
30 Banka splitsko-dalmatinska
137.961
-3,23
80%
31 Primorska banka
85.643
9,08
-
Banka Kovanica
n.p.
n.p.
-
Slavonska banka
-
-
258.285.453
1,79
18.892
-
101.488
-5,05
258.405.833
1,79
Slavonska banka
-
-
Gross profit
4.878.796
-17,18
Loss
(650.808)
274,17
Profit
4.227.988
-26,04
A štedna banka malog poduzetništva
(4.857)
-
Obrtnička štedna banka
(4.210)
-
Total
Gross profit
4.878.796
A štedna banka malog poduzetništva
Loss
(659.875)
Obrtnička štedna banka
Profit
4.218.921
General total
0,5
6,0
6,3
2,9 1,8
3,7
95%
26 BKS Bank
-
0,5
90%
1,8
5,2
5,1
2,0 3,1
75% 81,5
70%
78,8
65% 60%
2004. Bank
2005.
Investment funds
Insu
Source: ECB - Occasional Paper Series No. 95/Septe
Source: Data press
www.privredni.hr Business & Finance Weekly
13
Relationship between bank assets and GDP 120%
55.000 50.000
110%
assets in â‚Ź m.
45.000 100%
40.000 35.000
90%
30.000
80%
25.000
70%
20.000 60%
15.000 10.000
50%
2001. GDP
2002. Assets
2003.
2004.
2006.
2007.
2008.
2009.
Assets/GDP
Source: HNB, DZS, PBZ
and an increase in expenditure, especially in relation to bad loans reserves, return on assets (ROA) for banks decreased from 1.6% to 1.3% and return on equity (ROE) decreased from 9% to 7.4%. According to these indicators, the profitability of Croatian banks remains at a higher level, especially when compared with their foreign parent banks as well as many other banks in developed and transitional countries. However, the current situation requires serious assess-
ment, particularly if the global financial crisis still impacts greatly on the real sector, decreasing the number of new loans and increasing bad. Supplementary reserves would be required in such a situation. The global financial crisis is expected to continue throughout 2010 with GDP growth likely to remain negative. It is estimated that bad loans will continue their upward march both in 2010 and 2011, which economic lending is unlikely to restore.
Breakdown of financial sector and banking in GDP in Croatia
in Croatia
151,5
0,5
0,5
6,9
7,0
1,8
1,8
7,5
6,8
137,8
116,2
120 107,5
4,4
1,6
1,4
5,0
5,1
7,9
4,8
6,2
1,4
1,3
5,6
5,7
2,2
2,8
100 80 Level (%)
4,2
5,5
78,1
76,7
60 40 20
8
urance
2005.
76,3
76,7
73,5
21,9
75,4 0 2008.
2006. Saving banks
ember 2008.; HNB
2007. Pension funds
23,3
2008. Leasing
2009. Other
Banking within finance sector Non-banking within finance sector Banking in GDP Financial sector in GDP
2009.
Source: HANFA
14 FINANCE INDUSTRY
Privredni vjesnik Year III No 0117
CROATIAN INSURANCE 2009
Overall good results achieved Croatian insurers profits totalled €23.15 million, an increase of 19%
Vladimir Miletić he Croatian insurance market is currently characterised by stagnation, partially as a result of the global financial crisis. However, some companies used the current situation as an opportunity to increase premiums. Insurance assets amounted to some €3.82 billion or 10%. As the insurance sector shows a faster growth rate than any other branch of the financial sector, its share slightly increased from 5.4% to 5.7%; however, it still remains below
T
the national levels within developed countries. Life insurance decrease Total charged premiums for property insurance and personal insurance reached €1.29 billion, a 2.8% decrease over 2008. General insurance premiums totalled €0.95 billion, a 3% decrease when compared with the previous year. Life insurance premiums decreased by 2.2%, totalling €0.35 billion. However their share of total premiums increased to 26.4% in 2009 after standing
at 26.3% in 2008. Compulsory motor car liability for 2009 remained at the same level as in the year before. Motor insurance premiums increased again to 31%; after a 10 year period of premium decreases within total insurance premiums, the trend has been brought to a halt. This is presumed to be the result of attempts by the Croatian Insurance Bureau and the Ministry of Interior to reduce the number of uninsured motor vehicles. On the other hand, a decline in the sales of new cars as well as taking older vehicles out of serv-
ice, caused a reduction in total insurance policies from 2.046 million to 2 million whilst the average premium increased by 2%. Property insurance also shows surprisingly good results despite the global financial crisis. Insurance against fire and associated threats increased by 3.6% and their share in total premiums amounted to 6.2%. Other general insurance premiums were reduced by only 1.2%, so their share marginally increased from 8.1% to 8.2%. Although these two types of property in-
www.privredni.hr Business & Finance Weekly
15
d, the crisis notwithstanding Assets by type of insurance
Assets types of insurance in total market 2009. Accident
6%
Life
(%)
Health
3%
26%
Non-compulsory motor
11% Property
14%
Others
9% Compulsory motor
31%
Vrsta Accident Health Non-compulsory motor Property Compulsory motor Others Total non-life Life TOTAL
Total written premiums 10.000 million kuna 9.686 9.064
8.000
8.180
2008. 2009. % 000 kn 000 kn promjene 547.533 547.050 -0,09 305.614 294.810 -3,54 1.155.514 1.008.786 -12,70 1.354.146 2.910.935 861.485 7.135.227 2.545.775 9.681.002
6.000
6.067 5.578 5.098
4.000
4.071
4.336 4.530
3.516 3.096
2.000
0
1996. 1997. 1998. 1999. 2000. 2001. 2002. 2003. 2004. 2005. 2006. 2007. 2008.
surance tend to fluctuate - one year, insurance against fire and other risks shows an increase and other property insurance premiums increase in the next - their premiums show a general upward trend. Hence an increase of €0.55 million in the previous year. Total premiums amounted to €186.03 million compared with €185.48 million in 2008. Indicators not without ambiguity The previous year was quite turbulent for life insurance with
some insurers noting an increase and other noting a significant decrease. Life insurance policies, with the exception of fund policies, were not deeply affected by the global financial crisis. General and supplementary life insurance even managed to increase their premiums by several million Euros. When individual policies are considered, general life insurance increased by 3,000 whereas supplementary life insurance saw a decrease of 9,000. Unlike developed countries, annuity insurance, as a marginal type of insurance
0,30 0,01 -7,42 -3,05 -2,24 -2,84
2008. 5,66
Health
2009. 5,82
3,16
3,13
Non-compulsory motor Property
11,94
10,72
14,11
14,44
Compulsory motor
30,07
30,95
Others
8,77
8,48
Total non-life
73,70
73,54
Life
26,30
26,46
100,00
100,00
TOTAL
Total written premiums per capita in Croatia in kunas
(Data: Croatian Insurance Bureau)
7.350 6.626
1.358.222 2.911.154 797.589 6.917.611 2.488.672 9.406.283
Vrsta Accident
Non-life
Life
Total
2002.
998
260
1.257
2003.
1.062
304
1.366
2004.
1.139
354
1.493
2005.
1.228
427
1.655
2006.
1.355
488
1.842
2007.
1.484
560
2.043
2008.
1.610
574
2.184
on the Croatian market, also decreased in number. After an increase of 4.2% in 2008, accident insurance premiums for 2009 remained at the same level, totalling €74.93 million, 5.8% of total premiums. After deducting insurers losses those showing negative financial results - 2009 indicates an overall profit figure of €23.15 million, a 19% increase over 2008. Indicators of the financial situation for the insurance market are not without ambiguity. Despite favourable trends in total insurance resources, such a low level of in-
come earned is rather worrying. Although showing an increase in comparison with 2008, it cannot account for half the amount from previous years. Profit totals 8.8% of nominal capital and only 3.3% when nominal capital and reserves are combined. If technical provisions, exceeding €2.74 billion, are invested at 3%, they should generate an income in the region of €82 million. Providing that a minimal technical result is achieved, such an income should represent profit. This should be considered as the main goal for insurers in the near future.
16 FINANCE INDUSTRY
Privredni vjesnik Year III No 0117
Rating: Insurance companies - 2009. Ranking
Total
Total non-life
Assets individual companies in total market
Life
2009.
2008.
Company 2008. 2009. % 2008. 2009. % 2008. 2009. % 000 kn 000 kn change 000 kn 000 kn change 000 kn 000 kn change
1
1 Croatia osiguranje
3.243.961 3.029.486
-6,61 2.880.265 2.673.076
-7,19
363.696
356.410
-2,00
33,51
32,21
2
3 Euroherc osiguranje
1.086.568 1.043.632
-3,95 1.086.568 1.043.632
-3,95
-
-
-
11,22
11,10
3
2 Allianz Zagreb
1.121.070
986.164
-12,03
697.106
649.632
-6,81
423.964
336.532
-20,62
11,58
10,48
4
4 Jadransko osiguranje
680.209
661.183
-2,80
680.209
661.183
-2,80
-
-
-
7,03
7,03
5
5 Kvarner VIG
540.479
540.536
0,01
334.449
326.507
-2,37
206.030
214.029
3,88
5,58
5,75
6
6 Grawe Hrvatska
432.857
416.428
-3,80
165.787
157.419
-5,05
267.070
259.009
-3,02
4,47
4,43
7
8 Triglav osiguranje
377.860
400.089
5,88
297.084
318.681
7,27
80.776
81.409
0,78
3,90
4,25
8
7 Osiguranje Zagreb
396.875
370.895
-6,55
198.984
191.684
-3,67
197.892
179.211
-9,44
4,10
3,94
9
9 Merkur osiguranje
296.706
295.938
-0,26
29.222
31.740
8,62
267.484
264.198
-1,23
3,06
3,15
10
10 Generali osiguranje
267.256
272.077
1,80
139.796
165.652
18,50
127.461
106.425
-16,50
2,76
2,89
11
13 Uniqa osiguranje
183.567
234.370
27,68
91.272
112.578
23,34
92.295
121.792
31,96
1,90
2,49
12
11 Agram životno osiguranje
235.856
227.754
-3,44
-
-
-
235.856
227.754
-3,44
2,44
2,42
13
12 Sunce osiguranje
186.357
180.803
-2,98
186.357
180.803
-2,98
-
-
-
1,92
1,92
14
15 HOK osiguranje
105.058
145.128
38,14
105.058
145.128
38,14
-
-
-
1,09
1,54
15
14 Helios VIG
114.823
100.028
-12,89
63.471
47.223
-25,60
51.353
52.805
2,83
1,19
1,06
16
16 Croatia zdravstveno osiguranje
88.600
97.007
9,49
88.600
97.007
9,49
-
-
-
0,92
1,03
17
18 Erste osiguranje VIG
75.267
88.820
18,01
-
-
-
75.267
88.820
18,01
0,78
0,94
18
17 Cosmopolitan Life VIG
82.190
87.443
6,39
-
-
-
82.190
87.443
6,39
0,85
0,93
19
20 Velebit osiguranje
38.468
51.818
34,70
38.468
51.818
34,70
-
-
-
0,40
0,55
20
19 Basler životno osiguranje
64.702
49.818
-23,00
-
-
-
64.702
49.818
-23,00
0,67
0,53
21
22 Cardif osiguranje
25.205
35.526
40,95
25.205
35.526
40,95
-
-
-
0,26
0,38
22
24 Victoria životno osiguranje
979
31.158
3.082,64
-
-
-
979
31.158
3.082,64
0,01
0,33
23
21 Basler osiguranje
27.326
28.190
3,16
27.326
28.190
3,16
-
-
-
0,28
0,30
24
-
-
17.701
-
-
-
-
-
17.701
-
-
0,19
25
23 Velebit životno osiguranje
7.948
9.912
24,71
-
-
-
7.948
9.912
24,71
0,08
0,11
26
25 KD životno osiguranje
812
4.246
422,91
-
-
-
812
4.246
422,91
0,01
0,05
27
-
-
131
-
-
131
-
-
-
-
-
0,00
-3,05 2.545.775 2.488.672
-2,24
100,00
100,00
Societe Generale osiguranje
Victoria osiguranje Total:
Source: Data press
9.680.999 9.406.281
-2,84 7.135.227 6.917.610
2008. %
2009. %
www.privredni.hr Business & Finance Weekly
17
LEASING 2009
A severe slow-down in leasing leads to overall industry loss The number of active contracts was down 6.3% but total value showed a 1.6% upswing in 2009 Darko Buković ith 6.7% of the total assets of the Croatian financial sector, leasing is placed second, after banks, holding 75% of total financial assets. 2009 contracts showed a significant decrease in numbers, leading the leasing industry to significantly negative financial results.
W
Business operations generate losses Data published by Hanfa (Croatian Financial Services Su-
pervisory Agency), show that the Croatian leasing industry, comprising 26 companies, completed 2009 with a loss of €83.08 million after taxation. 15 companies generated €36.62 million in profit after taxation whilst a further 11 generated losses of €119.68 million. Bad and doubtful debt reserves are considered to be the major cause for losses in 2009, as they stand at €0.18 billion. Total assets in the leasing system amounted to €4.62 billion, a decrease of 4% year-on-year 2009 saw 31,581 new contracts completed, some 46.8% down
on 2008. Total value showed a fall of €1.0 billion or 46.9%. Total value for 2009 amounted to €1.12 billion. There were 166,414 active contracts (down 6.3% in comparison with the previous year). However, total value stands at €6.50 billion, up by 1.6%. When considering the structure of active contracts, finance leasing increased its share from 41.2% to 44.1% whereas operating leasing, with a 49.2% share, remained at its 2008 level. On the other hand, finance leasing showed an increase from 45.8% to 51.5% when the value
structure of active contracts is taken into consideration. Operating leasing claimed a 35.8% share in the total value of active contracts, a decrease in comparison with 2008, when it came in at 38.8%. In addition, loans also note a 2.7% decrease in the total value of active contracts. 2009 also saw a change in structure. According to Hanfa, the finance leasing share in the total number of newly agreed contracts totalled 51.3% with operating leasing amounting to 48.7%. This structure differs significantly from 2008 data,
18 FINANCE INDUSTRY
Privredni vjesnik Year III No 0117
Position in the industry on 31.12.2007., 31.12.2008. and 31.12.2009. DATE
Total asset (hrk b)
No. companies
Value of new contracts (hrk billion)
No. new contracts
No. staff
No. active contracts
Value of active contracts
31.12.2007.
25
30,3
997
55.835
13,8
158.407
39,2
31.12.2008.
26
35,1
1.007
59.410
15,5
177.572
46,8
31.12.2009.
26
33,7
993
31.581
8,2
166.414
47,5
Source: HANFA
Value of new contracts - facility leasing (HRK) New contracts value over time Type of facility
01.01.2008.31.12.2008.
Level %
01.01.2009.31.12.2009.
Level %
Ratio 2009./2008.
Absolute change
Personal car
5.720.159.306
37,0%
3.071.728.409
37,4%
53,7
-2.648.430.897
Commercial vehicles
3.442.799.732
22,3%
1.670.307.657
20,3%
48,5
-1.772.492.075
Machinery
2.370.631.604
15,3%
1.151.245.763
14,0%
48,6
-1.219.385.840
Installations
25.975.315
0,2%
20.080.407
0,2%
77,3
-5.894.908
Property
2.340.566.307
15,1%
1.578.396.991
19,2%
67,4
-762.169.316
Vessels
1.421.728.262
9,2%
594.940.172
7,2%
41,8
-826.788.090
Other
142.156.377
0,9%
125.535.116
1,5%
88,3
-16.621.261
TOTAL
15.464.016.902
100,0%
8.212.234.514
100,0%
53,1
-7.251.782.387
Source: HANFA
Leasing portfolio structure - compared values of new contracts over time (HRK mil) Operating leasing
Financial leasing
9000
8802
8000 7000 6000
6662
5000
5086
4000 3000
3127
2000 1000 0
1.1.2008.-31.12.2008.
1.1.2009.-31.12.2009.
Source: HANFA
HHI level down The Herfindahl-Hirschman Index of market concentration (HHI) is commonly used for the systematic monitoring of market structure. In this case, HHI has been applied to monitoring the leasing industry concentration in Croatia as a ratio of capital assets and value of active and concluded contracts in certain periods. Hence, HHI for market concentration in 2008 stood at 1759, which is considered as a sign of a moderately concentrated market. 2008 introduced a change in the market, as HHI for both 2007 and 2006 totalled above 1860, a sign of highly concentrated market. The 2009 index shows a decrease in all areas.
when finance leasing share totalled 47.1% and operating leasing 52.9% of newly agreed contracts. Finance leasing share
in the total value increased from 56.9% in 2008 to 61.9% in 2009. On the other hand, operating leasing decreased from 43.1% to
38.1%. Thus financial and operating leasing amounted to slightly over €0.70 million and €0.43 million respectively. Vessel leasing sinks Lease of vessels showed the most significant decrease in the number of new contracts, down 58.2%; the leasing of personal vehicles also noted a considerable reduction, €0.36 billion, or 46.3%. The lease of personal vehicles, with a 37.4% share of new contracts for 2009, is val-
ued at about €0.41 billion. The leasing of farm utility vehicles stood at €0.23 billion or 20.3%, real estate at €0.21 billion or 19.2% and finally the lease of machinery and equipment, at €0.16 or 14%. Farm utility vehicles were down by €0.25 billion (51.5%), machinery and equipment by €0.16 billion (51.4%) and vessels noting a reduction of €113.37 million or 58.2%. Other leasing areas noted a slowdown in financing new contracts in 2009.
www.privredni.hr Business & Finance Weekly
19
FUNDS
Enough energy for survival and enthusiasm Satisfactory returns from funds attract new investors • Both money and bond funds increase assets Marko Repecki/ www.hrportfolio.com otwithstanding all the vicissitudes emanating from the global financial crisis of 2009, the funds industry still generates enough energy for market survival and, indeed, enthusiasm. Total assets under management during the previous year amounted to €1.56 billion. Due to current trends on the money market and increased interest rates, returns from money funds attract new investors. In addition, the funds have significantly accumulated assets which in 2009, increased by 54.70% or more than €0.82 billion.
N
More conservative funds gain in popularity Bond funds, with assets having increased by 10.84%, show that the more conservative funds gained in popularity, as 10 such funds managed €76 million at the end of 2009. Last year, mixed funds were the only ones to show a (10.28%) decrease.On the other hand, shareholder funds increased assets by 4.12%, amounting to €0.39 billion, success being due to local market recovery. In addition, investors have been attracted to global fast-growing markets from Brazil, Russia, India and China, which generated significant returns, surpassing 60%. Both trends partially restored investor optimism. A change in the structure of assets, according to specific categories, has been seen. Some 52.99% of assets have been invested in money funds in comparison with 41.91% at the end of 2008. The share of bond funds decreased to 4.86%. Mixed and shareholder funds also experienced a decrease, at 16.91% and 25.23% respectively. Although the global financial crisis has not yet worked itself
Market share of funds
Market share of funds
(by asset size, 31. 12. 2008.)
(by asset size, 31. 12. 2008.)
Type of funds Mandatory pension funds
Asset HRK
Udjel %
29.264.636.432
59,26
Open voluntary pension
1.144.810.416
2,32
Closed voluntary pension
218.343.000
0,44
Pension fund
2.675.920.079
5,42
Veterans fund
2.223.347.571
4,50
Open-end investment fund
12.040.316.798
24,38
Closed-end investment fund
1.815.309.188
3,68
49.382.683.484
100,00
TOTAL:
Investment funds
Level % 2008
Level % 2009.
Equity
31,08
26,52
Mixed
23,30
17,28
Cash
39,76
50,91
Bonds
5,87
5,29
TOTAL:
100,00
100,00
Source: Data press
Source: Data press
out, certain ‘green shoots’ of recovery can be seen. Investment funds with a share in stock market are believed to have touched the very bottom in the first half of 2009, but showed a significant
showing a significant change in the geographical structure of investments. No less than 7 shareholder funds derived returns greater than 30%, MP-BRIC HR (+60%) and PB-
recovery in the third and fourth quarters.
ZI-Stock (+50%) being the most successful. On the other hand, four funds decreased by more than 20% as they were exposed to low-liquidity regional markets. Mixed funds were those who experienced the worst results, as a total of eight of the19 funds ended 2009 with losses. OTP Balanced, with + 18.32%, is considered to be the most successful, whereas InterInvest Balanced experienced the most significant loss, slumping -38.01%. All bond funds turned in positive results in 2009, ranging from 0.31% to 12.31%, with three in-
Investment into fastgrowing markets In the period prior to the global financial crisis, shareholder funds, oriented towards SE European markets, derived excellent returns. However, 2009 introduced a significant change, as the fast-growing markets proved to be more prosperous. Due to a considerable decrease in the level of liquidity in regional markets, funds were forced to turn to new areas, with some older funds also
creasing by more than 10% and seven by more than 5%. OTP euroobveznički was considered to be the most successful. Returns to become steadier Money fund investors have many reasons for showing contentment, as more than 50% of funds measured growth in excess of 6%, whereas the most successful – Raiffeisen Cash and ICF Money Market – showed growth totalling more than 9%. Hence, money funds have competed successfully with other forms of investment or savings with the same risk level. Further consolidation is anticipated during this year, as some corporations do not manage considerable assets. As it is questionable whether their business operations are lucrative, it is expected that specific funds as well as some investment companies may very well merge. Money fund returns are expected to become steadier, due to the reduced price of money. It is expected that these funds may be partially moved to shareholder or mixed funds, the moreso if the global financial crisis ends and the global economy recovers.
20 TOURISM
Privredni vjesnik Year III No 0117
A promising high season
This July to see 250,000 more foreign visitors than in the same period in 2009 The first two July weekends noted 250,000 more foreign visitors when compared with the same period in 2009. Recently, Damir Bajs, Minister of Tourism, stated at the Tourist Council of the Croatian National Tourist Board, that these numbers indicate a successful high season, especially when considering that this year 116,000 more visitors en-
tered Croatia via the Adriatic. When the current situation in Croatia is compared with foreign markets, Bajs emphasised that other comparative countries are fighting for each visitor through a significant decrease in the price of package tours as well as by encouraging local people to spend holidays at home. The situation is similar in Croatia, as both foreign and particu-
larly local visitors are encouraged to spend their holidays in a Croatian tourist resort. Prices within the tourism industry are not likely to change significantly, although visitors will be offered additional services, such as various excursions and visits. It is believed that the average modern tourist considerably appreciates such possibilities, concluded Bajs. (S.P.)
Golf part of the strategy for tourism development
IS IT JUST A SPORT OR CAN IT DEVELOP TOURISM
A further 89 golf courses could be constructed in Croatia, 55 in coastal region and 34 inland Sanja Plješa he construction of golf courses in Croatia has lead to heated discussions, as the general public believes they can disrupt the ecological balance as well as ruin the countryside and landscape. “The construction of specific courses has cast doubt that golf, as a sport occupying large areas of land, is just an excuse to create new construction sites, mostly in coastal regions and those areas
T
Some courses are planned for the Adriatic region, others to be developed in the Dalmatian hinterland of untouched nature, which are not protected by law. Experts and the general public are not ready to welcome the construction of golf courses for precisely these reasons”, says Stjepo Butijer, the President of the Council for
Physical Planning. He adds that golf should not to be perceived as the zenith of Croatian tourism but just a supplement. However, it plays a crucial role in tourism in certain countries, such as Scotland, England and Ireland and more recently Spain, Portugal, Tunisia and Turkey. First golf courses Although golf in Croatia can be traced back to the time before World War I, the first course with 18 holes was constructed in 1922 by Austrian industrialist Paul Kupelwieser on the island of Veliki Brijuni. The course served its purpose until 1939 when it was closed and the whole island was placed under protection as a national park. In 1929, Zagreb welcomed its first golf club although the first course with nine holes was constructed only in 1931 as part of the Maksimir public gardens. Unfortunately, this course was also closed after several years. Golf course developments in Croatia were not implemented until the late 1980’s and the first courses were built only ten years
later. In 1999, the Ministry of Tourism approved 19 of 60 suggested locations for golf courses, which were mostly located on farming land and woodlands as well as in public wooded areas. According to individual counties regional plans a further 89 golf courses are to be constructed in Croatia, 55 in coastal regions and 34 in the continental area. Some, planned for the Adriatic region, would be built on the coast with others being situated in the hinterland.
Golf not considered an elite sport any more “The construction of golf courses has advantages, such as a broader tourist programme, the creation of new jobs, a prolongation of the tourist season and an increased ecological awareness of local people”, promotes Butijer. He adds that golf, despite losing its elite cachet, is still considered as such, since golfers on average have a higher level of disposable income. Four 18-hole courses, open for tournaments, as well as an additional 17 courses, intended for learning, are currently maintained in Croatia. Although there are more than 60 million golf players worldwide, the sport is only now gaining in popularity in Croatia, as 30 golf clubs have a mere 550 members. Butijer believes the courses should be constructed in areas which are considered a lower overall value. In addition, a group of three to five courses should be located within an area of 30 kilometres, enabling players to test their abilities on each. According to Butijer, Slovakia can be considered as a fine example, as its courses are constructed near castles. “Such locations would require the reconstruction of individual castles. I believe we should follow such a fine example, as it is estimated that Croatia has some 1,000 castles that could be so used”, concludes Butijer.