The Council of the Croatian National Bank discussed the state of the banking system in 2023 at today’s meeting after being informed about the current economic, monetary, and financial developments in the euro area and Croatia.
As they state, the trend of decreasing the number of credit institutions continued in 2023 with the merger of Nova hrvatska banka into Hrvatska poštanska banka, so at the end of the year, a total of 20 credit institutions operated in Croatia. Their assets increased by 3.5 percent to a record €78.6 billion, with the main source of growth being predominantly the increase in received deposits.
– Based on this increase and slight restructuring of assets, loans and advances have increased the most. In this context, loans to households have increased the most – stated the HNB, adding that a renewed noticeable growth in cash non-purpose loans is evident.
The quality of assets measured by the share of non-performing loans (NPLs) continued to improve. Their amount has decreased while their share in total loans dropped to 2.6 percent. The greatest impact on the improvement of asset quality continues to be the improvement of loans to non-financial companies.
Contrary to the long-term trend of declining NPL shares, the share of loans characterized by a significant increase in credit risk, although not yet in default status, continued to fluctuate and rose to 15.6 percent. This was equally influenced by the increase in loans to households and non-financial companies, they reported.
– The indicators of the capitalization of the banking system are at high levels, although the total capital ratio decreased from 24.8 percent to 23.6 percent. The decrease in the total capital ratio was most influenced by the payment of dividends from retained earnings, and to a lesser extent by a slight increase in risk exposure based on credit activity – they conclude.
