HNB: In the third quarter, foreign direct investment in Croatia decreased by 103 million euros

According to data from the Croatian National Bank (HNB), Croatia received 610 million euros in foreign direct investments in the third quarter of 2017, which is 103 million euros or 14.5 percent less than in the same period a year earlier.

In the third quarter, the majority of the amount of direct investments relates to retained earnings, which accounted for 78.3 percent of the investments made in that quarter, analysts from Raiffeisenbank Austria (RBA) noted on Thursday in their review of HNB data. They added that the highest level of retained earnings was recorded in financial activities, accommodation services, and trade.

>>> HNB: Foreign direct investments in Croatia amounted to 427 million euros in the first quarter

“However, the level of retained earnings in the third quarter, as well as in the first two quarters of 2017, was lower compared to the same periods in 2016. This is largely due to the decrease in profits of credit institutions, which throughout 2017 were exposed to rising costs of value adjustments on placements to trading companies,” RBA noted.

They highlight placements to components of the Agrokor group, as the write-off of these placements led to a decrease in profits, i.e., retained earnings of banks and consequently the level of foreign direct investments in Croatia.

“Potential new write-offs of receivables in 2018 will depend on the outcome of the settlement with creditors, but if they occur, the amounts should be significantly lower compared to 2017 because the majority of uncollectible receivables have already been written off. Additionally, banks that participated in refinancing the group have obtained seniority status, i.e., priority of payment on part of the old placements based on the Agreement on the oldest loan,” RBA emphasized.

>>> HNB: Foreign direct investments in Croatia reached 1.7 billion euros last year

The remaining amount of foreign direct investments in the third quarter, 147 million euros, related to equity investments, with HNB stating that “in the third quarter of 2017, there was a noticeable increase in new equity investments in Croatia compared to the same period of the previous year,” and that the majority of investments were made in sports, entertainment, and recreational activities, the real estate sector, and in the production of means of transport.

HNB data also shows that in the first nine months of 2017, a total of 1.29 billion euros in foreign direct investments flowed into Croatia, which is 6 percent less than in the first nine months of 2016.