According to the latest report on the performance of the Croatian financial institutions, the total loans issued in March 2024 grew by 0.5% MoM, 3.7% YoY and amounted to EUR 43.6bn. At the same time, the average interest rate on new housing loans amounted to 3.76%, on new consumer loans 5.92%, while for corporates the average interest rate amounted to 5.04%, 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 March 2024. In the report, we can see that the total loans issued amounted to 43.6bn, growing by 0.5% MoM, and 3.7% 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 22.2bn, growing by 1% MoM, and 10.4% YoY. Corporate loans meanwhile, amounted to EUR 14.4bn, also growing by 1% MoM, and 2.9% YoY.
Corporate and household loans growth rates (January 2015 – March 2024, YoY, %)
Source: HNB, InterCapital Research
Taking a closer look at these categories, inside the household loans, housing loans remain the largest category at 49.7% of the total, or EUR 11.1bn in absolute amount, growing by 0.6% MoM, and 10.8% YoY. Following them there are consumer loans, which amounted to EUR 8.3bn, representing 37.2% of the total, and growing by 1.6% MoM, and 12.6% YoY. One other notable category is the other loans category, which recorded total loans issued of EUR 1.35bn, growing by 1.7% MoM, and 7% 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 6.04bn in March 2024, growing by 1.2% MoM, and 7.8% YoY. Following them there are working capital loans, which amounted to EUR 4.57bn, growing by 3.1% MoM and 5.7% YoY, as well as the other loans’ category, which amounted to EUR 3.95bn, and decreased by 0.7% MoM, and 4% YoY.
Composition of Croatian loans to households (October 2011 – March 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 3.76%, growing by 0.84 p.p. MoM, and 0.04 p.p. YoY. For consumer loans, the average interest rate was 5.92%, an increase of 0.47 p.p. MoM, but a decrease of 0.16 p.p. YoY, while for corporate loans, the average interest rate was 5.04%, an increase of 1.12 p.p. MoM, but a decrease of 0.16 p.p. YoY.
Average new housing and corporate loan interest rates (December 2011 – March 2024, %)
Source: HNB, InterCapital Research
Overall, what can be said about the loans in Croatia is the fact that there is obviously still demand for them, especially from households. One interesting factor is the fact that consumer loans continue to grow as much, while also having on average the highest interest rate. Stabilization in the overall interest rates has been recorded, however, and this was to be expected as no hikes from the ECB were seen for quite a while now. Given that the Croatian economy has largely avoided a recession, with growth in real wages and overall GDP growth recorded, it is unlikely that growth in the coming period will stop. In the future, it is unlikely that the interest rates will increase anywhere higher, and with the expected rate cuts, the interest rates on loans could also start receding. While profitability in banks across the board has largely been driven by these higher rates, a reduction in ECB rates to app. 2.5% which is currently estimated would still leave room for profit on the net interest margin, while at the same time allowing for more room for volume expansion.
