At the end of August 2022, the total deposits of Croatian financial institutions equaled HRK 406.1bn, breaching the HRK 400bn mark for the 1st time in their history. This would mean that they grew by 13.1% YoY, and 2.2% MoM.
The Croatian National Bank (HNB) has published its latest monthly report on the consolidated financial positions of the monetary financial institutions, for the month of August 2022. Within the report, we can see that by the end of August, the total deposits in Croatia amounted to HRK 406.1bn, which is an increase of 13.1% YoY, and 2.2% MoM. This would mean that even though the growth is continuing, on a monthly basis, the increase did somewhat decelerate from July’s and June’s 3.5% and 3.3% MoM increase, respectively. However, this growth is still above way higher than the average since 2010, during which the deposit growth amounted to a measly 0.4%.
The main factors that are still influencing deposit growth are the following: First of all, the tourism season. August is usually the month with the highest number of arrivals/tourist nights in any given year in Croatia. Taking into account that around 50% of all tourism-related real estate is rented by the private individual and not larger tourism companies when the tourists do pay the rent, a lot of that money is deposited in those renters’ accounts, thus leading to higher deposit rates. Secondly, the switch to Euro is also having its influence, as having a lot of paper money at hand means that money will have to be exchanged for euros sooner or later, and this is usually done by depositing the money in the individual’s bank account.
Furthermore, given the current macroeconomic situation, with a lot of inflationary pressures, especially in terms of energy and of course, consumer goods prices, having higher deposits is a must in case the situation escalates further and new and unexpected costs arise. Finally, Croatians usually hold a lot of money in the form of deposits, with the main investment type in the country being real estate which requires a lot more financing in terms of loans, and thus, higher deposits are required to both pay those loans, but also, indirectly to even allow banks to issue new loans (remember, loans and deposits are 2 sides of the same coin in the balance sheet of a given bank).
Looking at the deposits by the components, on a yearly basis, demand deposits increased by 15.2% in August 2022, and amounted to HRK 169.9bn. Meanwhile, saving deposits increased by 11.7% and amounted to HRK 236.1bn. On a monthly basis, demand deposits increased by only 0.2%, while saving deposits increased by 3.8%.
Dividing the saving deposits even further, deposits in the domestic currency (HRK) decreased by 15.2% YoY, and 0.6% MoM, amounting to HRK 27.4bn. This marks the highest decrease on a yearly basis and continues the trend for the last couple of months when the deposits in HRK have been declining by more than 10%. The reason is the aforementioned switch to Euro, which is set for January 2023. This would also mean that deposits in HRK currently stand at 11.6% of the total saving deposits, which is a decrease of 3.7 p.p. YoY, and 0.5 p.p. MoM. Meanwhile, foreign currency deposits, which account for the remaining 87.9%, amounted to HRK 208.7bn in August 2022. This would mean that on a yearly basis, they grew by 16.5%, while on a monthly basis, they increased by 4.4%. Also, this marks the first time that the foreign saving deposits breached HRK 200bn.
Croatian deposits breakdown (November 2012 – August 2022, HRKbn)
Finally, taking a look at the household deposits, they increased by 10.5% YoY, and 1.5% MoM, amounting to HRK 263.4bn by the end of August 2022. This would mean that 64.9% of all deposits held were household deposits, representing a decrease of 1.53 p.p. YoY, and 0.49 p.p. MoM.
