For the first time since December 2012, the amount of so-called bad loans is below 40 billion kuna. At the end of June this year, the latest data from the Croatian National Bank shows that the share of partially recoverable and completely irrecoverable loans amounted to 39.66 billion kuna. Compared to the beginning of the year, their amount is lower by as much as 6.2 billion kuna, and compared to the maximum values from the end of March last year, the amount has decreased by 8.8 billion kuna.
There are several reasons for the decline in bad loans. One of the most important is that banks are writing off this type of loan, or selling them to specialized companies and/or funds. For example, last year banks sold three billion kuna of bad loans. The latest data from the CNB, headed by Governor Boris Vujčić, shows that 65 percent of bad loans ‘came’ from the private sector, and citizens are struggling to repay or are not paying 12.77 billion kuna.
It is important to emphasize that by resolving bad loans from the banks’ balance sheets, their share in the total credit mass has fallen to just under 15 percent, which is the lowest level since the end of March 2013. The share of bad loans will continue to decline, due to the increasing number of companies rising from the ashes, but also because banks are getting rid of these loans from their balance sheets, thereby freeing up reserves. This allows them to operate even more simply and easily, and perhaps even offer cheaper loans.
