In the first three quarters of 2022, the assets of the banking system increased by a record 50.6 billion kuna or by 10.1 percent compared to the end of 2021. The predominant source of financing for the growth of assets was the deposits received in transaction accounts of households and non-financial companies, which significantly reflect the effects of a successful tourist season and the preparation of citizens for the introduction of the new currency.
The majority of the increase in assets was directed towards loans, particularly loans to non-financial companies in the energy supply sector, and the growth of cash funds continued, as announced by the Croatian National Bank, whose Council discussed the state of the banking system at today’s meeting and made several other decisions within its jurisdiction.
New lending activity and the continuation of the trend of reducing non-performing loans (NPLs) resulted in further improvement in loan quality, specifically a reduction in the share of NPLs from 4.3 percent to 3.3 percent. However, the increase in loans in stage 2 indicates increased risk in the performing part of the banks’ portfolios.
The total capital ratio decreased by almost two percentage points to 24 percent. This is a consequence of the reduction in regulatory capital, primarily influenced by unrealized losses based on the fair value assessment of bonds, and then by the increase in total risk exposure. Despite this, capitalization indicators remain at high levels.
Income generated from the reversal of impairment for expected credit losses is a key source of increased profit and profitability of operations, while the increase in profit was less influenced by the rise in net income resulting from increased fees and commissions, alongside the continued decrease in interest income.
The Council of the HNB granted consent to the Supervisory Board of Imex Bank d.d. for Ozren Dragčević to perform the function of President of the Management Board of that bank and granted consent to the Supervisory Board of Karlovačka Bank d.d. for Stjepan Oreški to perform the function of Management Board member of that bank.
