CNB Council: Strong growth in loans to households in 2023

Published: 16/4/2024

At its session today, the Council of the Croatian National Bank was informed about current economic, monetary and financial developments in the euro area and Croatia; it also discussed the condition of the banking system and adopted several decisions on matters falling within its competence.

The downward trend in the number of credit institutions continued in 2023 by the acquisition of Nova hrvatska banka by Hrvatska poštanska banka, so that at the end of the year, 20 credit institutions operated in the Republic of Croatia. Their assets increased by 3.5%, reaching a record high level of EUR 78.6bn. The growth is mainly attributable to an increase in deposits received. Based on this growth and a smaller-scale asset restructuring, loans and advances grew the most, with the most pronounced growth observed in loans to households. General-purpose cash loans grew noticeably again.

Asset quality measured by the share of non-performing loans (NPLs) continued to improve. The amount of NPLs decreased and their share in total loans dropped to 2.6%. The improvement in asset quality is still mainly driven by the improvement in the quality of loans to non-financial corporations. In contrast to the long-standing downward trend in the share of NPLs, the share of loans characterised by a significant increase in credit risk, although still not in default, continued to oscillate and grew to 15.6%. This was equally influenced by the increase in loans to households and loans to non-financial corporations.

Banking system capital adequacy indicators remained high, although the total capital adequacy ratio decreased from 24.8% to 23.6%. The decrease was mainly due to the payment of dividends from retained earnings and, to a lesser extent, to the slight increase in risk exposure based on lending activity.

The CNB Council also adopted the Decision on the issue of gold and silver numismatic coins “150th Anniversary of the Birth of Ivana Brlić-Mažuranić”.