According to the latest report on the performance of the Croatian financial institutions, the total loans issued in May 2024 grew by 0.9% MoM, 5.1% YoY and amounted to EUR 44.3bn. At the same time, the average interest rate on new housing loans amounted to 3.74%, on new consumer loans 5.95%, while for corporates the average interest rate amounted to 5.16%, all growing on a YoY basis, but showing signs of slowdown on the MoM basis.
Recently, the Croatian National Bank, HNB, released its report on the performance of Croatian financial institutions, including the data on loans in the country, for May 2024. In the report, we can see that the total loans issued amounted to 44.3bn, growing by 0.9% MoM, and 5.1% YoY.
Breaking this down further, the two largest categories, i.e. household loans and corporate loans recorded growth on both the MoM and YoY basis during the month. Household loans amounted to EUR 22.7bn, growing by 1% MoM, and 10.9% YoY. Corporate loans, meanwhile, amounted to EUR 14.8bn, also growing by 0.9% MoM, and 2.6% YoY.
Corporate and household loans growth rates (January 2015 – May 2024, YoY, %)
Source: HNB, InterCapital Research
Taking a closer look at these categories, inside the household loans, housing loans remain the largest category at 49.4% of the total, or EUR 11.2bn in absolute amount, growing by 0.7% MoM, and 10.5% YoY. Following them there are consumer loans, which amounted to EUR 8.5bn, representing 37.5% of the total, and growing by 1.5% MoM, and 14% YoY. One other notable category is the other loans category, which recorded total loans issued of EUR 1.39bn, growing by 1.5% MoM, and 7.6% YoY.
Moving on to corporate loans, they are broken down into three main categories: working capital loans, investment loans, and other loans. The largest of these, i.e. investment loans, amounted to EUR 6.2bn in May 2024, growing by 0.9% MoM, and 9.7% YoY. Following them there are working capital loans, which amounted to EUR 4.7bn, growing by 1% MoM and 6.2% YoY, as well as the other loans’ category, which amounted to EUR 4bn, and increased by 0.2% MoM, but decreased by 6.5% YoY.
Composition of Croatian loans to households (October 2011 – May 2024, EURm)
Source: HNB, InterCapital Research
Turning our attention to the 2nd most important component of loans, i.e. interest rates, we can see that while growth is still recorded on a YoY basis, there has been somewhat of a slowdown and stabilization on a MoM basis. The average interest rate on newly issued housing loans amounted to 3.74%, decreasing by 0.02 p.p. MoM, but growing by 0.77 p.p. YoY. For consumer loans, the average interest rate was 5.95%, a decrease of 0.16 p.p. MoM, but an increase of 0.35 p.p. YoY. Finally, the average interest rate on corporate loans amounted to 5.16%, growing by 0.1 p.p. MoM, and 0.51 p.p. YoY.
Average new housing and corporate loan interest rates (December 2011 – May 2024, %)
Source: HNB, InterCapital Research
Overall, it is unlikely that the market will experience higher interest rates after the ECB decided to cut rates by 25 basis points in June, bringing the rate to 3.75%. This rate reduction is expected to bolster the demand for loans in Croatia. The Croatian economy has largely avoided a recession, with notable growth in real wages and overall GDP. This economic resilience suggests that growth will continue in the coming period.
