The increase in net domestic assets of monetary institutions in October 2020 led to an increase in total liquid assets (M4), accompanied by a decrease in net foreign assets. The annual growth in M4 also accelerated slightly.

The total placements of monetary institutions to domestic sectors (excluding the central government) rose slightly in October after falling in the previous two months. Household placements continued to grow slowly, while loans to non-financial corporations fell at a somewhat slower rate than in the preceding months. The annual growth in total placements slowed down, mirroring the waning of the base effect of a relatively large increase in placements towards the end of the previous year, associated also with the period of the implementation of the housing loan subsidy programme.

At the end of October, total liquid assets (M4)^[1] stood at HRK 360.3bn, up by HRK 1.7bn or 0.5% from the end of September (Table 1). The increase in M4 based on transactions stood at 0.3%, but the depreciation of the exchange rate accelerated this growth to 0.5%. As regards the components of M4, money (M1)^[2] rose by HRK 0.7bn (0.4%) and quasi-money by HRK 1.0bn (0.5%). Kuna deposits (i.e. demand deposits) and foreign currency deposits of non-financial corporations rose the most. The assets side of the balance sheet of monetary institutions saw an increase in net domestic assets (NDA) of the monetary system of HRK 2.3bn, while net foreign assets (NFA) fell by HRK 0.7bn. The increase in NDA was largely due to an increase in net claims on the central government (as a result of a fall in central government deposits with the CNB). If observed on an annual level, the growth in M4 in October accelerated to 7.0% based on transactions and the growth in M1 to 15.7% (Figure 1).

Figure 1 Monetary aggregates annual rates of change based on transactions	Figure 2 Placements annual rates of change based on transactions
Source: CNB.

Total placements of monetary institutions to domestic sectors (excluding the central government) rose slightly in October (by only HRK 0.2bn or 0.1% from September, based on transactions) and stood at HRK 235.0bn at the end of the month, slowing down the growth in total placements on an annual level to 3.3% (Figure 2). Loans, the dominant component of placements, stood at HRK 229.2bn in October, with loans to households continuing to rise slightly in October (by HRK 0.3bn from the previous month, based on transactions), while loans granted to non-financial corporations continued to fall (by HRK 0.2bn from September), though at a somewhat slower rate than in the preceding months. On an annual level, the growth in loans slowed down in October to 3.7% as a result of a slowdown in the growth of loans to corporates (from 5.3% in September to 4.7% in October) and household loans (from 3.7% to 3.1%) (Table 2). The growth in general-purpose cash loans slowed down from 0.9% to 0.3% and the growth in housing loans slowed down from 8.4% to 7.7%, mirroring the effect of the base period, since October last year saw the effect of the housing loan subsidy programme, the implementation of which was this year moved towards the end of the year.

Table 1 Summary consolidated balance sheet of monetary institutions
in billion HRK and %

¹The sum total of asset items 2.2 to 2.8 of Bulletin Table B1: Consolidated balance sheet of monetary financial institutions.
²The sum total of liability items 2 to 5 of Bulletin Table B1: Consolidated balance sheet of monetary financial institutions.
Source: CNB.

Table 2 Loans (except the central government) and main components
in billion HRK and %

¹In addition to loans to households and corporates, they also include loans to the local government and other financial institutions.
²The transactions show changes that exclude the effects of exchange rate changes, securities price adjustments, reclassification and write-off of placements, including the sale of loans in the amount of their value adjustment.
Source: CNB.

For detailed information on monetary statistics as at October 2020, see:

Central bank (CNB)
Other monetary financial institutions

1. Total liquid assets (M4) as defined by the CNB represent a broader definition of currency in circulation. ↑

2. Money (M1) as defined by the CNB represents a narrow definition of currency in circulation. ↑