The Croatian National Bank (HNB) published the findings of the analysis in its latest "Makrobonitetna Analiza" ("Credit Rating Analysis" in an unofficial translation).
According to the publication, published on the central bank's web site, the reported quality of banks' placements in the first half of 2006 rose with the share of the best placement coming to 96.4 percent at the end of June 2006 in comparison to 96 percent at the end of 2005.
The publication also quotes a suggestion by the International Monetary Fund that in the currently favourable period, banks should be more aggressive in ensuring capital reserves so as to be braced for the deceleration of the economic growth.
The currency risk has been systematically present due to a high degree of eurosation in Croatia.
HNB experts believe that indirect currency risk is more dangerous to the stability of the banking sector owing to the fact that a great number of loans are tied to exchange (currency) clauses.
In mid-2006, 26.6 percent of all banks' assets were presented in foreign currencies, and 41.4 percent was tied to exchange (currency) clauses.
That's why, the HNB adopted a decree in mid-2006 that all banks are required to detect, follow and measure its exposure to the currency-induced credit risk.