ZAGREB, June 26 (Hina) - Intensified credit activity of Croatia's commercial banks is the most important monetary development in the first quarter of this year, Croatian National Bank (HNB) analysts say.
ZAGREB, June 26 (Hina) - Intensified credit activity of Croatia's
commercial banks is the most important monetary development in the
first quarter of this year, Croatian National Bank (HNB) analysts
say. #L#
Loans granted to the private sector at the end of the first quarter
amounted to 64.7 billion kuna, which is a nominal increase of 3.9
billion kuna or 6.3 percent. Last year's annual increase of loans
amounted to five billion kuna.
Such developments, particularly those referring to an increase in
loans granted to companies, are a sign of economic recovery, and
they are expected to continue in coming months as well, reads the
June Bulletin of the HNB.
Motivated by profit, the banks have partially changed the structure
of their portfolios by granting their loans more frequently to
domestic than foreign entities, which was the predominant practice
until now. These developments, which along with increased cash
demand, are a good start and announce a successful tourist season,
have caused appreciation pressure on the kuna exchange rate, reads
the Bulletin.
According to the HNB, particularly encouraging is the change in
loan developments according to sectors, i.e. an increase in loans
granted to companies, which comes after a two-year trend of
decrease (1998 and 1999) and stagnation in the second half of 2000.
The loan crisis affected the company sector most. The banks were
granting loans to companies at a slow rate explaining this with the
lack of good projects and the prevention of risk caused by legal
insecurity and inability to collect matured loans. The banks
therefore directed their loans to a more 'reliable' sector -
citizens. The share of companies in the loan sum, which in late 1998
amounted to 65 percent dropped in March this year to 54 percent,
whereas the share of citizens increased from 31 to 40 percent.
Kuna loans to companies in the first three months increased by 9.5
percent, which is an even faster increase than that of kuna loans
granted to citizens, which rose by 7.9 percent.
(hina) sb rml