By the end of September 2022, the total deposits of Croatian financial institutions amounted to HRK 408bn (EUR 54.2bn), achieving growth of 13.4% YoY, but slowing down to 0.5% MoM.
The Croatian National Bank (HNB) has published the latest monthly report of the consolidated financial positions of the monetary financial institutions, for September 2022. As can be seen in the report, by the end of September, the total deposits in Croatia amounted to HRK 408bn, which is an increase of 13.4% YoY, and 0.5% MoM. This would mean that despite the growth continuing, it is somewhat slowing down as compared to the last month. The main reason for this is the fact that the higher rates of deposits are always recorded during the summer. This is because around 50% of all the tourism-related real estate is rented by private individuals, and as such, when they receive the payment they receive it on their accounts, thus driving deposits up. Also, the switch to euros is also having an effect, as more and more paper money is put into deposit accounts in anticipation of the switch to the currency in January 2023.
Looking at the deposits by components, on a YoY basis, demand deposits increased by 15.2% YoY, and amounted to HRK 170.4bn. At the same time, saving deposits increased by 12.1% YoY and amounted to HRK 237.6bn. On a MoM basis, demand deposits increased by 0.2%, while saving deposits increased by 0.7%.
Dividing the saving deposits into deposits in the domestic currency (HRK), and foreign currency (mostly EUR), domestic currency saving deposits decreased by 13.7% YoY, 3.4% MoM, and amounted to HRK 26.4bn. This is again indicative of more and more of the deposits being switched to Euro, and thus, this will continue in the coming period. Foreign currency saving deposits increased by 16.5% YoY, 1.2% MoM, and amounted to HRK 211.2bn.
Croatian deposits breakdown (November 2012 – September 2022, HRKbn)
Taking a look at the household deposits, they increased by 10.9% YoY and amounted to HRK 266.5bn. On the monthly basis, they increased by 1.2% by the end of September 2022. This would mean that 65.31% of all deposits held are household deposits, which is a decrease of 1.49 p.p. YoY, but an increase of 0.44 p.p. MoM.
Despite the fact that inflation is continuing to wreak havoc on the disposable incomes of citizens, the deposit rates are continuing to grow. Given the fact that Croatians remain one of the largest holders of deposits in the world (as compared to other financial asset classes), and the fact that the Euro switch is coming, this growth can be somewhat justified. At the same time, the switch to Euro will mean that Croatians will also be under the direct influence of the ECB, which has already raised and is expected to continue raising interest rates. Even though this makes taking loans more expensive, it should also drive up the deposit interest rates up as well. However, due to the sheer amount of money held in deposits, the increase in the deposit interest rates will probably come slowly, as will the increase in the loan interest rate (for the same reason, i.e. the sheer amount of loans issued).