In October 2021, household lending was up by 4.1% on the year, with housing loans up by 10.6%, the Croatian Banking Association (HUB) says in a document on the marked recovery of household lending at historically low interest rates.

With a year-on-year GDP growth of 15.8% in Q3, the government’s forecast of a 9% growth this year seems likely, HUB says, adding that in October, real retail trade went up 9.5% on the year.

At the end of October, household loans reached HRK 141.7 billion and housing loans amounted to HRK 67.1 billion.

Non-purpose cash loans went up 1% from end-October 2020, totalling HRK 53.4 billion.

Other types of credit related to personal consumption, such as current account overdrafts and credit cards, decreased. This means, HUB says, that the rise in personal consumption continues to be primarily financed from the rise in net salaries, which in October 2021 were 5.4% higher on the year in nominal and 2% in real terms. Another contribution comes from the 2% year-on-year rise in the number of persons in employment.

On the other hand, corporate lending is still not recovering at significant rates, but liquidity is extremely high. At the end of October 2021, corporate loans totalled HRK 84.4 billion, down 0.1% on the year, but up 0.6% on September 2021.

Interest on kuna housing loans historically low

According to central bank data, the average interest on housing loans in the domestic currency in October 2021 was 3.19%, down 0.6% percentage points on the year and historically the lowest rate on these loans.

The average interest on other loans was 5.33%, down 0.49 pp on October 2020.

The average interest on housing loans with a currency clause was 2.66%, the same as in September 2021, but down 0.09 pp on October 2020, while the average rate on other loans with a currency clause was 4.19%, down 0.73 pp on the year and historically the lowest interest on such loans, HUB says.

Non-performing loans decreased from 5.1% at the end of Q2 to 4.7% at the end of Q3, also a historical low.

Croatian banks’ capital ratio is among the highest in the world and, at over 25%, the highest to date. This means that Croatian banks stand ready to support the continued economic growth at high rates in the years ahead, HUB says.

(€1 = HRK 7.5)