Cash Loans Accelerate Again, Credit Card Debt Surges

The credit restriction measures introduced by the Croatian National Bank on July 1 of last year, which will soon be further tightened, are yielding partial results, but not in line with bankers’ expectations. The latest published statistics show that double-digit annual growth rates, which have lasted for almost three years, have not been halted. Namely, total loans to households amounted to €29.2 billion at the end of July, which is 10.5 percent higher than a year ago.

As analysts from Raiffeisen Bank note, there was a solid monthly increase in total loans to households of €282 million or one percent more. If the credit movement is observed based on transactions, their annual growth slowed from 11 percent at the end of June to 10.7 percent at the end of July.

The portfolio of housing loans in banks is worth €14.7 billion, which is half of the total loans granted to the population. On an annual basis, the growth rate of these loans slowed from 13.1 percent to 12.3 percent due to the base period effect. On a monthly basis, housing loans increased by just over one percent or €164.8 million. Based on transactions, a slowdown in annual growth was also recorded, from 13 to 12.2 percent.

The recently published Bulletin of the Croatian National Bank highlights that the volume of newly contracted housing loans remained above the average for the first half of this year, as well as the average for last year. Additionally, the volume of new cash loans remained very high and amounted to €351 million, close to the highest levels reached in the first half of last year.

The placements that most fuel inflation, cash loans, on the other hand, are accelerating. In July, the portfolio of ‘cash loans’ was worth €11.4 billion, which is almost 40 percent of total loans. – Positive annual growth rates in this category have been ongoing since July 2021, with double-digit growth since November 2023 – states the RBA analysis.

At the end of last year, a strong acceleration was recorded on an annual basis, from 10.5 percent in November to 16.6 percent in December. However, this strong increase is the result of the reclassification of part of the mortgage loans into cash non-purpose loans. The reclassification was made as part of the improvement of the quality of data on household loans.

In July, the annual growth rate of this type of loan was 14.9 percent. Based on transactions, the growth of cash non-purpose loans accelerated from 9.3 percent in June to 9.8 percent in July on an annual basis. Regarding other types of citizen indebtedness, overdrafts on transaction accounts (popularly known as ‘minuses’), amounting to €696.1 million, account for 2.4 percent of total loans.

On a monthly basis, they grew by 0.3 percent, but fell by more than three percent compared to a year earlier. In the case of credit card loans (2.2 percent of total loans to the population), a contrary trend is recorded. They amounted to €636.1 million and, despite a monthly decline of 0.2 percent, were 15 percent higher on an annual basis.

For bankers, such trends in lending are not surprising. RBA analysts emphasize that, in line with expectations, there has been a noticeable continuation of solid demand for loans to the population during the current part of the year, with a tendency for the annual growth rate to slow towards 10 percent.