Corporate lending in Croatia reached 86.3 billion kuna (€11.4 billion) in December 2020, up 5.3 percent up year-on-year and up 2.5 percent from November 2020, the central bank said on Monday.

“Share of foreign currency-denominated corporate loans reached 63 percent at the end of December. Since (local currency) kuna had lost ground against the euro in that period, the nominal kuna amounts of loans increased,” Raiffeisenbank Austria (RBA) analysts said.

The gradual decline of the share of foreign currency-denominated loans in total corporate loans, which had been going on since September 2018, also reversed.

The share of long-maturity loans continued to increase, with loans five-year or longer loans accounting for 63.2 percent of all loans at the end of 2020.

The second wave of the coronavirus pandemic in the autumn of 2020 resulted in new restrictions affecting people’s mobility and business operations and leading to changes in corporate demand for loans. Due to the postponement of investment, businesses reduced their demand for new loans and increased liquidity reserves. Corporate demand for moratoriums and extension of loan repayment also increased, RBA analysts said.

They predicted gradual growth of corporate optimism driven by the start of the coronavirus vaccination campaign and the prospects for the return of tourists visiting the country in the summer.

“Since companies may still hesitate with investments in Q1 2021, we expect a stronger rise in demand for investment loans in Q2 2021,” they said.

(€1 = 7.56 kuna)