When the Management of MagNet Bank decided to offer MagNet customers the opportunity to distribute 10% of the Bank’s annual profit among civil organizations and major civil society projects, it also decided that customers’ participation in this distribution should be in proportion to their contribution to that profit. 

In this context, it was important to develop a method and a formula which make it possible to calculate, relying on customer behaviour and the use of the Bank’s products and services, the exact amount with which each customer has contributed to the generation of the Bank’s annual profit.

MagNet Bank has developed and finalized the formula and the apportionment method used to perform the above calculations.

Accordingly, customers can vote on what civil projects should be supported from 10% of the Bank’s annual profit, the amount on which they can vote being in proportion to their contribution to the annual profit. In 2010 and 2011 more than 10,000 customers distributed 44 million forints and 34.9 million forints, respectively.  

The calculation model and the apportionment method developed in light of the transparency of banking operation will be further developed and we strive to disclose further data to our customers.

As a result, we have opened up the opportunity for our customers to

   * see that instead of profit maximization, MagNet Bank considers responsible and sustainable operation its main priority and
   * make decisions on the use of the profit to which they have contributed as a responsible member of a community.

The calculation is as follows: the Bank performed the calculations in several steps and took into account a number of factors when calculating the final amount. First, the Bank’s total revenue was apportioned among customers and, therefore, a certain amount of revenue was allocated to each customer.

Other expenditures and revenues, however, can only be calculated by estimating proportions. There is no accurate method for such calculations. The same applies to tax and contribution payments. As a result, we decided to apply an apportionment method as our basic method.

Finally, in order to calculate each amount of pre-tax profit belonging to each MagNet customer, the proportion of the direct revenue/customer to the Bank’s total revenue was calculated and then used to estimate the amount with which each customer could have contributed to the realization of the Bank’s annual profit.

Despite the limitations of the calculation method, we think that we have introduced an innovation in the field of bank-customer relationship by calculating (and notifying each customer) the amount with which MagNet’s 14,569 customers contributed to the Bank’s annual profit.  This is a so far unprecedented phenomenon in Hungary.

Some typical examples:

Customer “A” has a deposit of 11,055,000 forints. The Customer has no credits and does not hold a bank account with MagNet. Due to this Customer, the Bank generated a profit of 81,341 forints and, therefore, the Customer can vote on the allocation of 8,134 forints in the Community Donation Programme.

Customer “B” private individual with a euro-based loan of 8,108,000 forints and a subsidized loan of 13,163,000 forints: the Customer has loans, but does not have any deposits and uses the bank account only to pay the monthly instalments of the loan. Due to this Customer, the Bank generated a profit of 65,892 forints and, therefore, the Customer can vote on the allocation of 6,589 forints in the Community Donation Programme.

Customer “C” is a kft and, therefore, has a business current account with MagNet Bank in which all transactions are performed, but the company has no deposits and loans. Due to this Customer, the Bank generated a profit of 67,075 forints and, therefore, the Customer can vote on the allocation of 6,707 forints in the Community Donation Programme.  

Customer “D” private individual with a personal current account, debit card and a deposit of 16 million forints: the Customer uses the current account for all transactions, including the payment of utility bills, has savings, but does not have a loan with the Bank. Due to this Customer, the Bank generated a profit of 169,932 forints and, therefore, the Customer can vote on the allocation of 16,993 forints in the Community Donation Programme.