At its session today, chaired by the Governor Boris Vujčić and attended by the Finance Minister Boris Lalovac, the Council of the Croatian National Bank examined the latest indicators on economic and monetary developments, with particular attention being paid to the impact of the transition from the national to the European statistical methodology. It was established that the transition had caused significant changes in several very important indicators so that in their use one should be careful to distinguish between the extent to which the changes are due to real developments and the extent to which they arise from methodological changes.

Monetary developments in June and July were marked by a sharp increase in foreign assets and domestic sources of funds. As the CNB continued the policy of supporting very high liquidity over the summer months, the average liquidity surplus stood at HRK 4.4bn in August, while interest rates in the money market remained close to zero. Developments in credit institutions' placements were characterised by increased government borrowing, while placements to the economy dipped, mainly as a result of the deleveraging of public enterprises. Having shown somewhat divergent movements in the previous three months, households continued to deleverage gradually in June and July.

The CNB Council also reviewed the report on the banking system for the second quarter of 2014. The system was characterised by a decrease in the external debt and assets of banks and a steady deleveraging of companies and households. For the first time ever, household deposits recorded a fall, which is partly attributable to substantial preseason investments in tourism and hotels and restaurants, the only activity that recorded growth in bank loans. The coverage of non-performing loans by provisions was raised to 48%. However, as profits of banks also increased, it is obvious that the more stringent provisioning policy has not threatened bank profitability. Banks successfully compensated for reduced interest income by cutting deposit rates as well as by making perceptible improvements in managing operating costs.
The company Importanne d.o.o., headquartered in Zagreb, was granted approval to acquire more than 30% of the initial capital of Jadranska banka d.d., Šibenik.

The CNB Council approved the proposals of several credit institutions' supervisory boards regarding new appointments or extension of mandates on their management boards. Tomislav Vuić was approved as Chairman of the Management Board of Hrvatska poštanska banka d.d., Zagreb, while the extension of the mandate was approved for Dubravka Kolarić as a Management Board Member of that bank; Marko Jurjević was approved as a Member of the Management Board of Raiffeisenbank Austria d.d., Zagreb. The extension of the mandate was approved to Balázs Pál Békeffy as Chairman of the Management Board of OTP banka Hrvatska d.d., Zadar, as well as to Branko Buljan and Ružica Šarić as Chairman of the Management Board and Member of the Management Board of Imex banka d.d., Split, respectively.