In March 2018 the total worth of loans to population reached 119.8 billion kuna (€16.2 billion), up by a billion kuna from the month before. This was the seventh month in a row with year-on-year growth in the total value of loans, analysts of Raiffeisenbank Austria (RBA) said on Friday.

The amount of loans to population in March rose by 2.1 percent compared to February, which is the biggest monthly rise since April 2012, which points to a gradual recovery of loan activities, RBA analysts said, commenting on recently data released by the central bank.

In terms of currency structure, March continued the trend of loans to population turning away from foreign currency-denominated loans towards those in the local currency, the kuna. The share of kuna-denominated loans reached 50 percent in March, vastly up from March 2012 when the ratio was 76-24 in favour of loans denominated in foreign currencies.

The total nominal amount of kuna loans reached 59 billion kuna (€8 billion) in March, which continues year-on-year growth rates since October 2015. On the other hand, the value of foreign currency loans was 60.5 billion kuna (€8.2 billion), or 8.5 percent down from March 2017.

By purpose of loans issued to population, the largest portion, or 44 percent, were housing loans, which rose by 1.6 percent year-on-year, to 52.6 billion kuna. These also had a marked turn towards the local currency in their structure, with kuna housing loans totalling 14.5 billion kuna, or 29.3 percent up from the same period the year before.

“The share of kuna loans in the total amount of housing loans grew to 27 percent, or 6 percentage points up year-on-year. At the same time, kuna-denominated loans with a foreign currency clause were 38 billion kuna, reducing their share to 72.4 percent,” RBA analysts said.

Non-purpose cash loans totalled 44.2 billion kuna in March, or 7 percent up from March 2017. This category too saw a shift towards kuna loans, as their share of the total rose to 69 percent.

“Although the positive year-on-year growth rate of total loans issued to population indicate a recovery of the general population’s loan activity, in line with our expectations growth rates should be moderate, especially considering the total indebtedness of the sector and the structural weaknesses in the labour market,” said RBA analysts in their report.

(€1 = 7.38 kuna)

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