The Amount of Citizens’ Deposits in Banks Represents About 50 Percent of Expected GDP of Croatia for 2023

At the end of 2022, a significant increase in citizens’ deposits was recorded as a result of the introduction of the euro, and this trend continued throughout this year. The current amount of citizens’ savings in banks of €37.6 billion represents about 50 percent of the expected GDP of Croatia for 2023, announced the Croatian Banking Association (HUB).

The growth rate of household deposits continued to accelerate, rising in August at an annual rate of about seven percent, and after the introduction of the euro as the official currency, about 93 percent of the amount of citizens’ deposits is in the domestic currency.

According to monetary statistics, at the end of September 2023, total deposits of domestic sectors amounted to €61.2 billion. Total deposits of domestic sectors increased by €3.6 billion or 6.3 percent during the third quarter of 2023, and compared to the end of the third quarter of 2022, an increase of €3.6 billion or 6.2 percent was recorded. Thus, the annual growth rate of total deposits at the end of September 2023 remained the same as at the end of June 2023, said the Croatian National Bank (HNB).

When viewed by sectors, during the third quarter of 2023, the largest increase in deposits was recorded in non-financial corporations by €1.5 billion or ten percent and households by €1.3 billion or 3.7 percent, while deposits of the general government increased by €0.5 billion, or 12.2 percent.

Digitalization of Banks Attracts Consumers

Term deposits still account for only about one-quarter of total citizens’ deposits, which is a result of a long period of historically low interest rates. The European Central Bank has significantly tightened monetary policy to curb high inflation rates, raising key interest rates at ten consecutive Governing Council meetings, which has also affected the movement of interest rates in Croatia. The average interest rate on term deposits for citizens in August rose by 1.23 percentage points year-on-year, and it is expected that the share of term deposits will increase in line with the rise in interest rates on savings.

Banks are investing significant resources in the digitalization of their services and products, which has a direct impact on the increasing portion of transactions between consumers and banks and the execution of payment transactions using modern electronic technologies. The share of electronic orders in total consumer credit orders continued to grow from 72 percent in the first half of 2022 to 74.6 percent in the same period of 2023. A significant increase was also observed in orders placed via mobile devices, which according to the latest data represent 65.8 percent of the total orders, or 88.2 percent of the structure of electronic orders.

– Consumers continue to recognize banks as partners that simultaneously guarantee security and the best quality-to-price ratio of services. Croatian banks have a capital adequacy of over 22 percent and according to this criterion, they are among the best capitalized in the world. This is a guarantee of the security of citizens’ savings as well as the ability of banks to support further economic recovery, investments, and the creation of new jobs through the provision of services and the offering of loans – concluded HUB.