The survey was conducted in October and November 2004, including 35 of the 39 banks which operated in Croatia in late September 2004.
More than half of all bankers, with 98 per cent of all assets, estimate that competition among banks over the next two years will become stronger.
This competition is noticeable in all segments of operations and is the strongest in operations with citizens.
Over the next two years, one-third of all banks, with 50 per cent of all assets, estimate an increase in citizens' applications for loans, while the majority of banks estimate these applications will stay at the current level.
Two-thirds of all banks, with 76 per cent of all assets, expect an increase in companies' applications for loans.
The competition is expected to result in the further reduction of active interest rates, the reduction of interest margins, a higher bank efficiency, and the introduction and upgrading of new products and services.
Over the next two years 28 banks plan to increase the number of branches, 26 the number of automatic tellers and 24 the number of employees.
Nearly all banks expect their market share to increase or stay the same in 2005 and 2006.
They also estimate that the independent survival on the market is a real option for nearly two-thirds of all banks, while several bigger banks plan to take over other domestic banks.
The majority of the banks, with 96 per cent of all assets, believe that currently there are too many banks in Croatia.
Over the past two years consolidation reduced the number of banks, from 46 in late 2002 to 41 in late 2003 to 37 in late 2004. The process continued and in late June this year 34 banks operated in Croatia.
According to the survey, bankers believe that the central bank's measures have reduced the profitability of borrowing abroad. However, they claim that domestic sources are insufficient to finance the desired growth so borrowing abroad will remain necessary.