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KÖVET (MagNet Bank) - MagNet customers’ contribution to the Bank’s annual profit

Added on 22-03-2013


MagNet Bank


KÖVET Association for Sustainable Economies



Business challenge

MagNet Hungarian Community Bank recognizes the value of aligning its core values to the transparency within the banking operation.


The Bank responded to this challenge through calculating and making available to its customers the amount of their contribution to the Bank’s annual profit to provide the customer with 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 behavior 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 developed and finalized the formula and the apportionment method used to calculate and inform MagNet customers about the amount with which they contributed to the Bank’s pre-tax profit.

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.

The calculation is performed in several steps by taking into account a number of factors when calculating the final amount. Firstly, 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. 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 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 generation of the Bank’s annual profit.

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.


In 2010 and 2011 more than 10,000 customers distributed 44 million forints and 34.9 million forints, respectively.

  • MagNet customers contribute to the implementation of projects that they are personally connected to.
  • Learning to break down the amount of other expenditures and revenues as well as of taxes and contributions to each individual client as this can only be estimated.
  • There are no accurate and generally accepted methods for such calculations.
  • Our colleagues were trailblazers in developing and improving the methods applied.

Challenges/Lessons learned:

  • MagNet customers responded very favorably when the Bank disclosed to them the amount with which they contributed to the annual profit and welcomed the opportunity to vote, in proportion to that amount, on the distribution of the Bank’s profit among civil society initiatives.
  • Increasing numbers of customers decide that they would like to become part of the MagNet community and more and more civil organizations wish to take part in our community donation program year by year.



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