As of the end of November, the total financial institution’s loans amounted to HRK 280bn, which represents a 3.03% YoY increase and a 0.3% MoM increase.
Croatian National Bank (HNB) published its monthly statistical report on loan replacement of other monetary financial institutions. According to the monthly statistical report, as of the end of November, total financial institution’s loans amounted to HRK 280bn, a rise of 3.03% YoY and an increase of 0.27% MoM.
The largest segment, the household loans recorded a growth of 4.2% YoY and 0.1% MoM. At the same time, corporate loans recorded a 0.52% increase MoM and a 0.7% increase YoY. October was the first time in 8 months that the corporate loans have experienced an increase (since February) and in November growth in corporate loans continued. Looking on the YTD basis, household loans increased by 4.1%. Corporate loans were down by 1.7% YTD, which is 7th month in a row of decrease, while positive YTD rates have not been evidenced since March 2021.
Corporate and Household Loans Growth Rate (YoY)
Total loans issued to households amounted to HRK 141.85bn, representing a 4.2% increase YoY (or HRK 5.7bn). The increase comes on the back of the rise in housing loans (10.1% YoY or HRK 6.17bn). Government’s subsidizing program also influenced the growth of housing loans, which amounted to an increase of 0.5% MoM or HRK 323m. Consumer loans, which remain at the level of 37.6% (or HRK 53.3bn) of all household loans, witnessed an increase of 1.24% YoY or HRK 652.2m.
The household loans growth was partially offset by the lower result of credit card loans ( -11.6% YoY or HRK -431m) and overdrafts on transaction accounts (-6.28% or HRK 428m). Overdrafts on transaction accounts are the 4th biggest category of household loans, amounting to HRK 6.4bn. YoY decrease on overdrafts on transactions accounts could be associated with Regulator action from the end of July, when it send sent a circular to the banks informing them that it was initiating an amendment to the Consumer Credit Act regarding the approval of current account overdrafts. As a reminder, the Croatian National Bank, the regulator conducted a survey of banks’ practices and found that 70% of consumers, that have open current accounts where they receive their salaries, have an approved overdraft loan. Banks offer permissible and tacit overdrafts, and more than 95% of all overdrafts are tacit overdrafts, which are on average 30% more expensive than allowed overdrafts and often amount to 300% of average monthly salary. The Croatian National Bank announced that it considers that the Consumer Credit Act stipulates that tacit and permissible overdrafts are two different products, with different purposes, prices and levels of consumer protection. CNB has also announced the amendments that it plan to address in changes to the Consumer Credit Act. It has also informed banks that it expected them to inform their clients on future changes so that banks can in due time harmonize their practices with the announced amendments to the Consumer Credit Act.
Previously mentioned four segments all together account for 91.9% of total household loans. Looking over to other loans, which total amount comes to HRK 9bn, the negative trend continues as this segments decreased by -3.5% YOY and -0.4% MoM, respectively.
Loans to Households (HRK m)