Croatia

HVB Splitska banka, created through the merger of HVB Croatia and Splitska banka, is pursuing an expansion strategy. Compared with 2003, the number of customers rose by 12% or some 45,000 to a total of more than 400,000 customers. With a market share of 9.3%, HVB Splitska banka is the fifth largest bank in Croatia.

At year-end 2004, customers were served through 111 branches (33 more than in 2003). Most of the new branches are located in areas like Slavonia and the central and northern parts of Croatia, which were previously not covered by the bank’s network to any significant extent. With the implementation of the new branch strategy, the bank now has a country-wide presence. The considerable expansion of the branch network within a few months was made possible by a cooperation agreement with FINA, a state financial institution: based on a shop-in-shop concept, HVB Splitska banka offers the same products and services as in any other branch. The opening of HVB Splitska banka units in FINA branches was accompanied by a marketing campaign.

2004 was a successful year for HVB Splitska banka. Net income before taxes was € 35.7 m (up by 26% on 2003), Croatia had the fourth best result of all CEE subsidiaries. The bank achieved a return on equity of 17.7% and a cost/income ratio of 59%. The trend in net interest income (+12%) and net fee and commission income (+33%, resulting from higher commission income from lending business and custody services) was gratifying. HVB Splitska banka is one of the leading banks in custodian business. As a result of new branches being opened, general administrative expenses rose by 14%.

Business structure and development
For more efficient relationship management for corporate customers, two corporate centres were opened. The bank has thus responded to growing demand for banking services from corporates.

In project finance, HVB Splitska banka participated with BA-CA Vienna in one of Croatia’s major infrastructure projects, the extension of the A2 toll motorway from Zagreb north to the border of Croatia and Slovenia at Macelj, based on a public private partnership model (PPP model).

Our Croatian subsidiary also financed foreign direct investments. HVB Splitska banka enjoys a strong position particularly in greenfield investments (new manufacturing plants on undeveloped land). Moreover, the bank has facilitated entry to the Croatian market for several well-known international retail chains. Support of foreign investment of this nature creates jobs that offer good prospects.

HVB Splitska banka is also a partner for Croatian export companies. Through cooperation with HBOR (Hrvatska banka za obnovu i razvitak/Croatian Bank for Reconstruction and Development) the bank made a considerable contribution to financing the Croatian export sector.

The implementation of the shop-in-shop concept in FINA branches alone brought the bank more than 17,000 new retail customers. Card business made an important contribution to results in 2004: HVB Splitska banka was able to further expand its traditionally strong position in credit card business with the successful “VISA Revolving Card” (card-supported consumer credit). The total number of cards issued increased to more than 100,000 in 2004. A similar trend was seen in payment cards. This positive trend is founded on ten years’ experience gained by HVB Splitska banka in card business. The card payment processing centres for Central and Eastern Europe are located in Prague and Split. Available expertise is thus used for other countries, too.

The public housing project in which HVB Splitska banka is the sole partner of the state building agency APN continues to be highly successful. The successful launch of the private loan campaign “HIT-cash loans” led to further growth in the bank’s financing volume. In order to provide our customers with a comprehensive range of services the bank has further expanded its cooperation arrangements to include the insurance company “Euroherc Osiguranje”.