By the end of June 2022, the total loans of the Croatian financial institutions amounted to HRK 296.2bn, an increase of 6.4% YoY, and 0.5% MoM.
The Croatian National Bank (HNB) has published its latest monthly report on the changes recorded by the Croatian financial institutions recently. As can be seen in the report, by the end of June 2022, the total loans of all financial institutions amounted to HRK 296.2bn, representing an increase of 6.36% YoY, and 0.52% MoM.
Taking a look at the household loans (the single largest segment of the loans), in June 2022, they increased by 5.4% (or HRK 7.53bn) YoY and 0.94% (or HRK 1.37bn) MoM. Meanwhile, corporate loans increased by 12.1% YoY (or HRK 10.4bn), 0.33% MoM (or HRK 313m), and amounted to HRK 95.8bn.
Corporate and household loans growth rate (YoY, %)
Overall, the loans issued to households at the end of June 2022 equaled HRK 146.4bn. Breaking this down by categories that drove the increase, housing loans still remain the main driver of growth, increasing by HRK 6.4bn YoY (or 9.9%), while on a monthly basis, they increased by HRK 1.2bn or 1.7%. Housing loans also retain their position as the largest segment of household loans, at app. 48.7%, representing an increase of 1.97 p.p. YoY, and 0.37 p.p. MoM. Meanwhile, the 2nd largest category of household loans, i.e. consumer loans, accounted for 37% of the total household loans, growing by HRK 1.49bn or 2.84% YoY, and HRK 138.8m, or 0.26% MoM.
The 3rd largest category of household loans, other loans, increased by HRK 103.5m (or 1.15%) YoY and amounted to HRK 9.1bn. On a MoM basis, these loans remained roughly the same, and are currently accounting for 6.24% of the total household loans, representing a decrease of 0.26 p.p. YoY.
In July Croatia experienced the highest inflation rates in the country’s history being recorded (link) and this is having a negative influence on the disposable income of Croatia’s residents. All the underlying factors influencing the inflation are not improving so it appears that the current inflationary environment is not transitory. Steady growth of consumer-loans is evidenced, while housing loans growth has accelerated. Despite inflation growth consumers are still not putting off buying cars and other expensive items. Still quite high growth of housing loans could be driven by borrowers rushing to lock in rates before they rise more. Positive sentiment is also coming from the businesses side, as in the first half of 2022 we have seen a flood of new applications and loans issued to corporates surged in July to 12.1% YoY. This is trend we expect to continue throughout this quarter, while deterioration in operating profitability could make them put on the break on new investments some time at the end of the year. However, the sentiment, at least when it comes to banks and loans issued is still quite positive, as can be seen with the increase in the largest loan categories. This could change, however, as higher interest rates which are expected by ECB will increase the interest rates on all loans issued, which could cool their growth.
Composition of Croatian loans to households (HRKm)
