Banking System Assets of 311 Billion Kuna

Banks in Croatia achieved a pre-tax profit of 4.2 billion kuna last year, while housing savings banks reported a loss of 60 million kuna, according to some data from today’s meeting of the Council of the Croatian National Bank.

 The HNB Council reviewed the latest economic and monetary developments, the state of the banking system in the fourth quarter of last year, and the report on the management of international reserves in 2006, as announced by the central bank. In the last quarter of last year, 33 banks and five housing savings banks operated in the Croatian banking system. Of these, 16 banks were in domestic private ownership, while two banks and one savings bank were state-owned.

In foreign ownership, there were 15 banks and 4 housing savings banks, but they accounted for 91 percent of the total assets of the banking system. According to unaudited provisional data, in the observed quarter, bank placements increased by 25.3 billion kuna, their indebtedness to the majority foreign owner by 11.7 billion kuna, and equity capital by 2.3 billion kuna. At the end of last year, the total assets of the banking system amounted to 311.1 billion kuna, which is 16.78 percent more than at the end of the previous year, of which 304.8 billion belonged to banks and 6.4 billion to housing savings banks.

The capital adequacy ratio was 13.23 percent. From the submitted unaudited data from banks, it follows that last year’s profitability measured by the return on assets was 1.50 percent, and the return on equity was 12.61 percent. The reported pre-tax profit at the end of 2006 amounted to 4.2 billion kuna for banks, while housing savings banks reported a loss of 60 million kuna. The international reserves managed by the central bank reached 8.7 billion euros at the end of last year, which is 1.3 billion more than at the end of 2005.

The increase in reserves was achieved largely through interventions in the foreign exchange market, where the HNB purchased foreign currency on 12 occasions last year to weaken appreciation pressures and prevent excessive strengthening of the kuna, while only once did the central bank sell foreign currency, as announced by the HNB.  (H)