By the end of November 2022, the total arrivals in Croatia amounted to 330.6k, an increase of 46% YoY. Meanwhile, tourist nights amounted to 926.2k, an increase of 36% YoY.

The Croatian Tourist Board (HTZ) has published its latest report on the developments in Croatian tourism, for the month of November 2022. In the report, we can see that even though the tourism industry is officially over for 2 months now, the growth recorded both in terms of arrivals and overnight stays is still present. However, considering that this period in 2021 was still under the influence of COVID-19 restrictions, growth is to be expected.

In total, the tourist arrivals in November 2022 amounted to 330.6k, an increase of 46% YoY. Of this, foreign tourist arrivals amounted to 188.4k, an increase of 70% YoY, while domestic tourist arrivals amounted to 142.2k, an increase of 23% YoY. However, if we were to compare these numbers to 2019, we can still see that we are in general, below the levels recorded. Total tourist arrivals are 17% lower than in 2019, with foreign tourist arrivals being 28% lower, while domestic tourist arrivals achieved a modest 4% growth.

Moving on to tourist nights, they amounted to 926.2k in November 2022, representing an increase of 36% YoY. Of this, foreign tourist nights amounted to 629.7k, an increase of 53% YoY, while domestic tourist nights amounted to 296.5k, an increase of 11% YoY. Compared to 2019’s level, the total number of tourist nights is 9% lower. Out of this, foreign tourist nights decreased by 3%, while domestic tourist nights decreased by 20%.

Together, this would mean that despite the strong recovery compared to 2021, we are still below the 2019’s level, both in terms of arrivals and overnight stays, which could be attributed to the high inflation rates currently experienced across Europe, which are reducing the disposable incomes and thus budget of travelers, as well as the higher prices of services in the tourism industry, driven by higher costs on their side. This is also supported if we look at the average stay per person, which amounted to 2.8 nights per person, representing a decrease of 6.7% YoY, and 43.5% compared to 2019.

Total tourist arrivals and tourist nights in Croatia (January 2019 – November 2022)

Source: HTZ, InterCapital Research

When looking at the tourist nights by country of origin, in October, German tourists still maintained the highest proportion of the total, at 24%, followed by domestic tourists at 15%, Austrian tourists at 9%, UK tourists at 8%, Slovenian tourists at 7%, and tourists from the US at 4%. As already mentioned, the total number of arrivals and nights in October is a lot lower than during the summer season, but arrivals from the UK and USA also mean that travel by airplane is recovering, which is a welcoming sign. Moving on to the counties arranged by the number of tourist nights, Splitsko-dalmatinska leads the way at 691.4k, followed closely by Istra with 684.4k, Kvarner with 482.8k, Dubrovačko-neretvanska with 469.1k, and Zadarska, at 310.2k.

Looking at the data since the beginning of the year, in the 10M of 2022, the number of arrivals amounted to 18.1m, of which, an increase of 37% YoY. Of this, foreign tourists accounted for 15.8m, which is an increase of 41% YoY, while domestic tourists accounted for the remaining 2.35m, an increase of 12% YoY. On the other hand, tourist nights during this period amounted to 102.6m, which is an increase of 24% YoY. Of this, foreign tourists accounted for 91m, an increase of 28%, while domestic tourists accounted for 11.9m of tourists nights, an increase of 2% YoY. Compared to the same period in 2019 , total arrivals are 9% below 2019, while total nights are 4% below level of 2019.

By the end of October 2022, the loans of Croatian financial institutions increased by 9.06% YoY, continuing their trend of strong growth. By the end of the month, they amounted to HRK 304.6bn.

The Croatian National Bank (HNB) has recently published its latest report on the developments and changes recorded by the Croatian financial institutions, for October 2022. During the month, we can see that the total loans of Croatian financial institutions increased by 9.06% YoY, while on a monthly basis, they increased by 0.48%, amounting to a total of HRK 304.6bn. The continued growth in the loans issued is a positive indicator in the current macroeconomic environment, especially on a monthly basis. This would mean that despite the challenges like inflation, and high costs of living faced by the citizen and corporate clients alike, the demand for loans, as well as the banks’ willingness to lend, is still strong.

If we looked at the loan growth more closely, we can see that growth was recorded by both corporate and household loans, albeit the corporate loans remain the main driver of growth. Starting off with the household loans first, they amounted to HRK 148.7bn in October 2022, representing an increase of 4.9% YoY, or HRK 7bn. Meanwhile, on a monthly basis, they increased by 0.26%, or HRK 385m. On the other hand, corporate loans increased significantly, growing by 22.1% YoY, 1.39% MoM, and amounting to HRK 103bn. Breaking the growth of the corporate loans further, we can see that on a YoY basis, investment loans increased by 18%, or HRK 6.1bn, and amounted to HRK 40.9bn. Following them, we have working capital loans, which increased by 20% YoY (or HRK 5.56bn), and amounted to HRK 32.8bn, and finally, other loans, which increased by 31% (or HRK 6.98bn), and amounted to HRK 29.4bn.

On a monthly basis, the main driver of growth was the other loans, which increased by 4.2% (or HRK 1.18bn), followed by investment loans, which increased by 1.4% (or HRK 553m), while working capital loans decreased by 1% (or HRK 324m). What can be taken away from this data is that despite the environment of high inflation and cost growth, companies are still investing a lot of money, and are also taking working capital loans. Even though a month is too short of a period to tell, the reduction in working capital loans issued could be seen as both a positive and a negative; positive in the sense that companies might not need as much money as they thought to finance their operations, but also negative, as the reduction in operations could be due to the reduction in orders and in general, expectations of a recession.

Corporate and household loans growth rate (January 2015 – October 2022, %)

Source: HNB, InterCapital Research

Moving on to household loans, housing loans are the largest category, at HRK 73.6bn, or 49.5% of the total. On a YoY basis, they increased by 9.6%, or HRK 6.4bn, while on an MoM basis, they increased by 0.41% or HRK 302.8m. Next up, we have consumer loans, which amounted to HRK 54.3bn, or 36.5% of the total, representing an increase of 1.62%, or HRK 826.6m YoY, and 0.1%, or HRK 51.8m MoM.

Composition of Croatian loans to households (October 2011 – October 2022, HRKm)

Source: HNB, InterCapital Research

Looking at the effective interest rates, they have increased for both household and corporate clients. For households, the most common housing loans are in EUR, and the effective tax rate for newly issued loans in this category amounted to 3.18%, an increase of 0.11 p.p. YoY, and 0.03 p.p. MoM. Consumer loans in EUR had an effective interest rate of 5.96%, representing an increase of 0.69% YoY, but a decrease of 0.40% MoM. In terms of corporate clients, loans issued in euros with the size of EUR 7.5m or less, had an effective interest rate of 2%, an increase of 0.49 p.p. YoY, and 0.36 p.p. MoM. For loans bigger than EUR 7.5m, the effective interest rate increased significantly, growing to 2.74%, an increase of 1.84 p.p. YoY, and 0.75 p.p. MoM.

Foreign currency corporate and housing loans effective interest rates (January 2012 – October 2022, %)

Source: HNB, InterCapital Research