Bank profits in Croatia fell by 26.8 percent

The total profit before taxation of banks in Croatia last year amounted to 3.45 billion kuna, according to provisional unaudited data for banks published today by the Croatian National Bank.

Compared to previously published unaudited data for 2011, this represents a decline in gross bank profits of 1.26 billion kuna, or 26.8 percent. The data from the Croatian National Bank refers to 31 banks in Croatia and is based on information provided by the banks to the central bank. According to this data, last year 19 banks reported a profit before taxation, while 12 banks reported losses totaling 472.7 million kuna.

Compared to the unaudited data for 2011, the number of banks that had losses last year increased by four, and their total loss significantly increased by 365 million kuna. The total assets of all banks at the end of 2012 amounted to 400.26 billion kuna, a decrease of 1.64 percent compared to 2011. The capital adequacy ratio averaged 20.52 percent.

As is usually the case, the largest gross profits were achieved by Zagrebačka banka, amounting to 1.15 billion kuna, and Privredna banka Zagreb, with 972.4 million kuna. These two largest banks accounted for as much as 61.4 percent of the total gross profit of all banks in 2012, both recording a profit decline slightly above 29 percent, with Zagrebačka down by 29.3 percent and Privredna by 29.6 percent.

These two banks hold a share of 42.5 percent in the total assets of the 31 banks in Croatia (ZABA 25.61 percent, and PBZ 16.91 percent). The assets of Zagrebačka banka at the end of last year amounted to 104.4 billion kuna, a slight increase compared to the same period the previous year, by 0.38 percent. PBZ has assets of 68.9 billion kuna, an increase of 1.40 percent.

In terms of profit before taxation last year, Erste banka follows with a gross profit of 598.1 million kuna, a decrease of 25.5 percent compared to 2011, while Raiffeisenbank recorded a profit increase of about 13 percent, to 432 million kuna.

Hypo Alpe-Adria Bank made it to fifth place in gross profit, recording a multiple increase in gross profit, from 54.9 million kuna in 2011 to 326.5 million kuna last year. The Croatian National Bank notes that Hypo conducted a transaction to reduce partially recoverable and non-recoverable placements in mid-December as part of a project implemented at the level of the entire Hypo group.

More than one hundred million kuna in gross profit last year was also achieved by two other foreign-owned banks – Societe Generale-Splitska banka with 129.7 million kuna and OTP Bank with 125.9 million kuna. In seventh place in terms of profit before taxation is Hrvatska poštanska banka, state-owned, which ended last year with a gross profit of 92.8 million kuna, which is 12.9 percent more than the previous year.

Hrvatska poštanska banka recorded an asset growth of 3.56 percent last year, to just over 17 billion kuna at the end of 2012.

Of the total 283.9 billion kuna in loans in Croatia at the end of last year, 13.81 percent, or 39.2 billion kuna, relates to so-called bad loans, according to data from the Croatian National Bank (HNB).
This data shows that the share of so-called bad loans decreased compared to September last year when their share was 14.05 percent.

However, on an annual basis, there is an increase in the share of partially recoverable and fully non-recoverable loans in total loans, by almost 1.4 percentage points, from 12.43 percent at the end of 2011 to 13.81 percent at the end of last year, according to data published by the central bank on its website.

This data warns of a noticeable increase in the share of ‘bad’ loans since 2008, when their share was 4.94 percent, exceeding 10 percent in September 2010 and reaching 11.23 percent by the end of that year, climbing to 12.43 percent at the end of 2011, and peaking in September last year when their share exceeded 14 percent, ending the year at 13.81 percent.

At the same time, it should be noted that there is a significant trend of deleveraging, as total loans fell from 291.7 billion kuna at the end of 2011 to 287.2 billion at the end of September last year, and to 283.9 billion kuna at the end of last December.

Data on partially recoverable and fully non-recoverable loans in total loans by sectors show that state units pay their loans most regularly – of the total 37.7 billion kuna in loans to state units at the end of 2012, the share of bad loans in that sector was 0.18 percent.

The most problems with servicing loans are faced by commercial companies, where the collection of nearly a quarter of loans, out of a total of about 108 billion kuna in loans, is questionable, with 24.68 percent or 26.6 billion kuna in the category of partially recoverable and fully non-recoverable. The share of bad loans of commercial companies increased by 4.5 percentage points compared to the end of 2011, when it was 20.13 percent.

Total loans to households at the end of last year amounted to 126.2 billion kuna, of which ‘bad’ loans were 11.9 billion kuna, representing a share of 9.45 percent (compared to 8.61 percent at the end of 2011). Households were most indebted through housing loans, which at the end of last year amounted to 59.2 billion kuna, of which the collection for 6.17 percent, or 3.6 billion kuna, is questionable. Following in size for households are other loans amounting to 56.8 billion kuna at the end of last year, with a share of bad loans of 12.71 percent, or an amount of 7.2 billion kuna.

The largest share of non-recoverable loans among households is in mortgage loans, amounting to 23.67 percent, with 727.6 million kuna of the 3.1 billion kuna in questionable collection. The share of non-recoverable auto loans among households is 4.97 percent, and ‘bad’ loans on credit cards are 4.44 percent.