After a strong increase from February to May (due to significant price increases in imported energy and raw materials and companies’ efforts to borrow under favorable conditions to preemptively counter the expected rise in borrowing costs), loans to companies recorded a modest monthly increase (0.3 billion kuna or 0.3 percent). By the end of June, loans to companies exceeded 95.8 billion kuna, which is 12.1 percent or 10.3 billion kuna higher year-on-year.
At the same time, there has been a noticeable increase in both investment loans and working capital loans for the fourth consecutive month. Investment loans recorded a double-digit growth rate of 10.9 percent, while working capital loans increased for the second month in a row by as much as 17.1 percent. On a monthly basis, investment loans rose by 0.8 percent (to 38.7 billion kuna), while working capital loans reached 33.02 billion kuna or 1.1 percent, according to the macroeconomic analysis by RBA analysts.
Total placements of monetary institutions to domestic sectors (excluding the central government) increased by 1.8 billion kuna or 0.7 percent compared to the end of May (based on transactions), reaching 259.2 billion kuna. Their annual growth rate accelerated to 7.9 percent in June compared to 7.4 percent in May.
The monthly increase in placements was entirely generated by the growth of loans, which constitute the main item of placements. The largest contribution to the growth of loans came from the increase in loans to households, specifically housing loans, which in June compared to May increased by 1.2 billion kuna or 1.8 percent monthly (6.2 billion or 9.5 percent annually). Their nominal amount at the end of June was 71.3 billion kuna, making up 49 percent of loans allocated to the household sector.
Growth of cash non-purpose loans
The growth of housing loans is associated with new loans granted under the state repayment subsidy program for younger age groups, as well as a form of investment aimed at protecting against inflation and utilizing the positive effect of real negative interest rates on loans. Based on the status, total loans (excluding loans to the central government) amounted to 252.7 billion kuna and recorded a growth rate of 0.7 percent in June compared to the previous month and 7.6 percent compared to the same month last year.
When viewed by sectors, based on the status, loans to households totaling 146.4 billion kuna were higher by 1.4 percent on a monthly basis, while the annual growth rate slightly accelerated to 5.4 percent (from 5.2 percent in May). In addition to the previously mentioned strong contribution of housing lending, cash non-purpose loans also recorded growth. With an amount of 54.2 billion kuna (37 percent of loans to the household sector), they recorded a slight increase of 0.1 billion kuna or 0.3 percent on a monthly basis and 1.5 billion or 2.8 percent on an annual basis.
In the second half of the year, we expect slower growth of housing loans after the spring volume of subsidies is utilized, while consumer loans should grow faster under the pressure of consumer prices. The accelerated growth of consumer prices compared to the growth of wages and other household incomes opens a gap in household budgets and maintains demand for consumer loans.
On the other hand, disruptions in supply chains have increased the level of uncertainty and introduced high risk into financial decisions among entrepreneurs. To finance rising procurement costs and strengthen inventories of raw materials in the face of certain disruptions in supply chains, there has been an increased use of short-term loans for working capital.
