At the end of August 2023, the total amount of loans that were issued by the Croatian financial institutions recorded an increase of 0.6% MoM and 6.2% YoY. Meanwhile, the average housing loan interest rate amounted to 3.46%, representing an increase of 0.2 p.p. MoM, and 0.9 p.p. YoY. Consumer loans also recorded an increase in their interest rates, with it amounting to 5.87% on average, an increase of 0.2 p.p. MoM, and 0.7 p.p. YoY.

Recently, the Croatian National Bank, HNB, published its latest report on the performance and changes recorded by the Croatian banking sector, including the data for loans. From the report, we can see that in August 2023, the total loan amount issued by all Croatian banks amounted to EUR 42.3bn, representing an increase of 0.6% (or EUR 262m) MoM, and 6.2% (or EUR 2.5bn) YoY.

The two main categories driving this, household and corporate loans, are still recording positive growth rates, at least on a yearly basis. In total, household loans amounted to EUR 21.1bn, an increase of 0.9% (or EUR 191.3m) MoM, and 6.8% (or EUR 1.34bn) YoY. Corporate loans, on the other hand, decreased by 0.5% (or EUR 69.9m) MoM but increased by 9.7% (or EUR 1.27bn) YoY.

Corporate and household loans growth rate (January 2015 – August 2023, %)

Source: HNB, InterCapital Research

Next up, we took a look at the growth drivers within these categories, starting with corporate loans. On an MoM basis, working capital loans decreased by 0.7%, or 33.5m, investment loans increased by 0.2%, or EUR 13.4m, while the other loan categories recorded the largest increase, of 1.4%, or EUR 59m. Meanwhile, on a YoY basis, working capital loans increased by 2.1%, or EUR 91.2m, investment loans increased by 6.6%, or EUR 354.9m, while other loan categories grew by 26.6%, or EUR 892.9m. Here we can see that despite the challenging environment currently faced by the companies, the demand for loans is still quite high.

Moving on to household loans, the largest category is of course housing loans, which account for 50.2% of the total. In August 2023, housing loans amounted to EUR 10.6bn, increasing by 1.2% (or EUR 122.7m) MoM, and 9.9% (or EUR 956.7m) YoY. Solid growth was also recorded in consumer loans, which by the end of August amounted to EUR 7.7bn, increasing by 0.7% (or EUR 53.7m) MoM, and 6.4% (or EUR 461.2m) YoY.

Composition of Croatian loans to households (October 2011 – August 2023, EURm)

Source: HNB, InterCapital Research

Of course, loan amounts by themselves wouldn’t tell the entire story, and interest rates also have to be looked at. In August 2023, the average housing loan interest rate amounted to 3.46%, an increase of 0.2 p.p. MoM, and 0.9 p.p. YoY. Consumer loans also recorded an increase, with the average interest rate amounting to 5.87%, a growth of 0.2 p.p. MoM, and 0.7 p.p. YoY. Finally, corporate loans recorded an interest rate of 4.98%, an increase of 0.2 p.p. MoM, and 3.1 p.p. YoY. From this, we can see that it is significantly more expensive right now for corporate clients to take loans, which could explain a slight slowdown in the amount of corporate loans. On the other hand, despite the increasing housing loan interest rates, as well as the ever-growing housing prices, housing loan growth is still continuing. Given the demand and supply discrepancy in the housing market, this trend will likely continue moving forward.

Average new housing and corporate loan interest rates (December 2011 – August 2023, %)

Source: HNB, InterCapital Research