As of end August, total financial institution’s loans amounted to HRK 271.2bn, which represents a 7.0% increase YoY.
Croatian National Bank (HNB) published their monthly statistical report on loans placement of other monetary financial institutions. According to the monthly statistical report as of end August, total financial institution’s loans amounted to HRK 271.2bn, which represents a 7.0% increase YoY, while the figure is flat on a MoM basis.
Its biggest categories household loans and corporate loans evidenced growth of 3.9% YoY and 3.7% YoY, respectively. Note that corporate loans have since April been observing a negative trend, recording MoM decreases. As of end August, corporate loans amount to HRK 84.82bn, representing a decrease of 0.88% MoM.
It is also worth adding that loans to central government witnessed sharp increase of 30% YoY to HRK 42.86bn, which was mostly evidenced with the beginning of the pandemic. To be specific, this relates to a HRK 6bn loan to the state (for Covid-19 support) which occurred in parallel to HNB reducing the required reserves for banks freed additional funds. Meanwhile, loans to local government amounted to HRK 5.34bn, representing an increase of 14%.
Total loans issued to households amounted to HRK 135.17bn, representing an increase of 3.9% YoY (or HRK 5.13bn). Such an increase was almost entirely driven by a rise in housing loans (+9.1% YoY or HRK 5.04bn) and somewhat consumer loans (+1.9% YoY or HRK 992.8m). It is worth noting that these two items account for 83.6% of the total loans to households. The mentioned increase was partially offset by a decrease in almost all other loan segments (besides mortgage loans). It is worth noting that car loans observed a sharp drop of 21.4% or HRK 122.9m, which is the highest drop of all segments. This does not come as a surprise, given the low car sale trend which has been observed throughout this year.
Loans to Households (HRK bn)
Source: Croatian National Bank, InterCapital Research
If we were to compare total loans issued to households since the beginning of the pandemic, one can notice a slight decrease of 0.1% or HRK 201.6m. Such a decrease mostly came on the back of a decrease in consumer loans of 2.3% or HRK 1.23bn, while being somewhat offset by an increase in housing loans by 2.3% or HRK 1.35bn. Meanwhile. the majority of other loan segments also recorded a decrease in the observed period. It is worth noting that we expect consumer loans to further decrease by the end of the year, given the shaken consumer confidence caused by the Covid-19 crisis. This has been a steady trend since the outbreak of the pandemic (when observing MoM development). However, it is worth noting that the decrease has seen a steady slowdown in these months. Assuming that banks enforce a stricter credit policy, we could potentially again witness higher decreases in consumer loans.
On the flip side, housing loans continue recording MoM increases, with the exception of April (lockdown period), when housing loans observed a 0.6% decrease.
Structure of Loans to Households (August 2020)
The transition to the Prime Market and the first trading day with HT’s shares on the Prime Market will take place on 14 October 2020 (tomorrow).
Following up on HT applying to enter the Prime Market of the ZSE, yeterday HT announced that the Zagreb Stock Exchange passed the Decision approving the transition of 80,766,229 ordinary shares of the company from the Official to Prime Market of the Zagreb Stock Exchange.
The transition to the Prime Market and the first trading day with HT’s shares on the Prime Market will take place on 14 October 2020 (tomorrow), when HT will be joining the company of AD Plastik, Arena Hospitality Group, Atlantic Grupa, Podravka and Valamar Riviera. This will also lead to the company’s share to joining the CROBEXprime & ADRIAprime indices on 19 October.
In the table below you can see the weights of CROBEXprime following the addition of HT.
| Free float factor | Number of shares | Weight factor | Weight* | |
| ADPL | 70% | 4.199.584 | 1,00 | 4% |
| ARNT | 50% | 5.128.721 | 1,00 | 7% |
| ATGR | 45% | 3.334.300 | 1,00 | 18% |
| HT | 45% | 80.766.229 | 0,49 | 30% |
| PODR | 85% | 7.120.003 | 1,00 | 26% |
| RIVP | 55% | 126.027.542 | 1,00 | 16% |
*Based on share price as of 12 Oct 2020
Prime Market is the most demanding market segment of the ZSE with regard to the requirements set before the issuer, especially in relation to transparency.
Some of the requirements before the issuer are the following:
- The issuer must have an investor relations function in place
- Free float min. 35%
- At least 1,000 shareholders
- Market cap. of minimum HRK 500m
- The issuer of shares shall enter into a market making contact with at least one market maker
- The supervisory board of the issuer must have at least one independent member
- At least one member of the audit committee shall be independent of the issuer
- Developed and disclosed dividend policy to the public
We fully support the addition of HT in the prime market as it marks a step forward on making CROBEXprime a potentially better peer for Croatia than current CROBEX. The reason behind is that CROBEX consists of a large number of shares which many fund managers would not even include in their investment universe (due to extremely low liquidity, poor corporate governance), while CROBEXprime consists of less constituents, however the ones which are the most transparent and liquid.
As a reminder, the ZSE launched CROBEXprime on 18 February of 2019. The index itself is a free float market capitalization weighted total return index (takes dividends into account), while the weight of each constituent share is capped to 30%.
Performance of CROBEXprime Since Initiation