Next year, we may expect negative credit growth in the private sector. Whether this will indeed be the case will primarily depend on the state’s need for domestic market financing, stated Zdeslav Šantić, chief economist of Splitska banka, at the pre-Christmas meeting of the bank’s management with journalists.
– The key problem for banks will be how to grow moderately while maintaining a quality portfolio. Bank profits will continue to decline while provisions for risky placements will increase, he estimates. Tomislav Krpan, the bank’s CEO for retail banking, claims that they have been more conservative than other banks, with provisions for non-performing housing loans being less than 3 percent, and for cash loans slightly above 6 percent. Without providing specific figures, he only states that provisions for corporate loans are lower. – Due to the increase in provisions, the cost of credit is high; you must account for both risk and the high cost of deposits. Take an interest rate of 10 percent; it must include a collection risk of 6 percent, and the remaining four percent includes refinancing costs, deposits, and our margin, explains Krpan. Šantić adds that next year, at the system level, provisions for loans with a repayment term longer than 90 days could exceed 15 percent.
