Lending to private households has risen sharply in 2023, with a significant increase in cash loans for general purposes, the Croatian National Bank (HNB) announced on Tuesday.

At its meeting on Tuesday, the HNB Council reported that the number of credit institutions will continue to decline in 2023, as Nova Hrvatska Banka was merged with Croatian Postal bank (HPB). At the end of 2023, there were 20 credit institutions operating in Croatia.

Their assets increased by 3.5% to a record high of € 78.6 billion, with the growth mainly due to an increase in deposits, according to the HNB.

Based on this growth and a slight restructuring of assets, loans and advances grew the most, with loans to private households increasing the most. There was also a further increase in cash loans for general purposes.

The quality of assets, as measured by non-performing loans (NPLs), continued to improve. Their amount decreased, while their share of total lending fell by 2.6%. The biggest contribution to the improvement in asset quality was again made by the improved quality of loans to non-financial companies, according to the HNB.

Contrary to the long-standing trend of a declining share of NPLs, the share of loans with a significantly higher credit risk continued to fluctuate and rose to 15.6%, which is equally attributable to an increase in loans to private households and non-financial companies.

The indicators for the capitalisation of the banking system are at a high level, although the total capital ratio fell from 24.8% to 23.6%. This decline is mainly due to the distribution of dividends from retained earnings and, to a lesser extent, a slight increase in risk exposure due to lending activities.