Current Overdrafts Surpass Housing Loans

Total loans from banks to the population of Croatia reached nearly 117 billion kuna by the end of July this year, representing an increase of 13.5 percent over the past year. After years of dominance, housing loans have for the first time lost their leading position in total loans to the population.

However, the biggest novelty is not the slightly lower growth rates of loans to the population compared to previous years, but rather the changes that have occurred in the structure of loans over the past year. Namely, after years of dominance, housing loans have for the first time lost their leading position in total loans to the population, ceding this place at the end of July to the item ‘other loans’. Currently, such loans, in which significant shares consist of overdrafts on current accounts, popular overdrafts have reached as much as 51.5 billion kuna, accounting for 44 percent, while loans for housing solutions amount to 47.9 billion kuna, making up 41 percent of total loans to the population.

Analysts emphasize that the latest change in the leading positions in the structure of total loans to the population is a consequence of restrictive credit policies, as well as recent inflationary shocks. Additionally, with an amount of 9.2 billion kuna, auto loans still hold third place with a share of 7.8 percent. There has also been significant growth in credit card loans since the end of last year. Such loans have increased by 11.5 percent in just seven months this year, reaching 5.4 billion kuna. As for total (bank) loans to companies, they reached 91 billion kuna by the end of July, increasing by 7.2 billion kuna or 8.5 percent over the year.

However, analysts point out that the actual growth rates of loans to companies are certainly much higher for the simple reason that companies, unlike the population which does not have this option, could bypass domestic banks and utilize cheaper foreign financing, which they seem to have taken advantage of abundantly. Partly for this reason, it can be assumed that, according to initial estimates by analysts, the actual growth of loans to companies is much, and for some perhaps even double, higher than would be concluded at first glance, or according to statistical data from banks. (Nikola Prskalo)