Bad loans reached 41.5 billion kuna

Of the total 284.6 billion kuna in loans in Croatia at the end of March this year, 14.57 percent or nearly 41.5 billion kuna relates to so-called bad loans, according to data from the Croatian National Bank (HNB).

According to HNB data, the share of so-called bad loans, i.e., partially recoverable and completely unrecoverable loans, increased by 0.6 percentage points compared to the end of last year, when their share was 13.93 percent.

The increase in the share of ‘bad’ loans is even more pronounced on an annual basis, amounting to more than 1.8 percentage points, from 12.74 percent at the end of March 2012 to 14.57 percent at the end of the third month of this year, according to data published by the central bank on its website.

According to this data, a noticeable increase in the share of ‘bad’ loans has been recorded 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. By the end of 2011, the share of ‘bad’ loans rose to 12.43 percent, exceeding 14 percent for the first time in September last year, and the level at the end of March this year is the highest recorded to date.

Data on partially recoverable and completely unrecoverable loans in total loans by sectors show that commercial companies have the most problems with servicing loans, with questionable collection on more than a quarter of loans, i.e., out of a total of 109 billion kuna in loans, 26.24 percent, or an amount of 28.6 billion kuna, falls into the category of partially recoverable and completely unrecoverable.

The share of bad loans of commercial companies compared to the end of 2012, when it was 24.96 percent, has increased by nearly 1.3 percentage points, and compared to March last year, when it was at a level of 21.01 percent, it has increased by more than 5.2 percentage points by the end of the third month of this year.

Total loans to the population at the end of March amounted to nearly 126 billion kuna, of which bad loans were 12.2 billion kuna, representing a share of 9.67 percent. For comparison, at the end of 2012, this share was 9.49 percent, and at the end of March last year, it was 8.74 percent.

The population has mostly borrowed through housing loans, which at the end of March this year amounted to nearly 59 billion kuna, of which questionable collection is 6.36 percent or 3.75 billion kuna.

In terms of loan amounts for the population, cash non-purpose loans follow with about 37 billion kuna at the end of March, and their share of bad loans was 9.07 percent or 3.35 billion kuna.

The largest share of non-recoverable loans among the population is in mortgage loans, amounting to 24.58 percent, meaning that out of 3 billion kuna, questionable collection is 742.7 million kuna. Among other loans to the population, which amounted to 11.8 billion kuna at the end of March, bad loans accounted for 23.54 percent, or 2.7 billion kuna.

The share of hard-to-collect receivables based on overdrafts on transaction accounts was 14.9 percent at the end of March, with credit card loans at 4.53 percent, and auto loans at 4.06 percent.

Data from the central bank also show that state units pay their loans most regularly – out of a total of 38.3 billion kuna in loans to state units at the end of March this year, the share of bad loans in that sector was 0.24 percent.

Data on loan quality by currency show that at the end of March, out of nearly 74 billion kuna in loans in kuna (without currency clause), the amount in the category of partially recoverable and completely unrecoverable was 12.5 billion kuna, or 16.98 percent.

The share of bad loans linked to the euro and Swiss franc is similar, at 13.68 percent in euros and 13.65 percent in francs.

Thus, out of a total amount of 180.9 billion kuna in loans in or linked to the euro, the amount in the category of bad loans is 24.7 billion kuna, while out of 27.2 billion kuna in loans in francs, questionable collection is 3.7 billion kuna.

When it comes to loans in francs, the situation is most difficult for companies, where questionable collection is on more than half of the loans in that currency. Namely, companies in francs have just over 2 billion kuna in loans, and in the category of partially recoverable and completely unrecoverable, the amount is nearly 1.1 billion kuna, or 51.99 percent of them.

The population has 24.8 billion kuna in loans linked to the franc, of which questionable collection is 2.6 billion kuna, meaning the share of bad loans in total loans in francs is 10.51 percent. In this context, the share of bad loans in housing loans for citizens in francs is 9.62 percent, while it is most pronounced in other loans to the population, amounting to 26.94 percent.