Such high capital guarantees stability in case of an extended crisis and decline in lending, said HUB director Zoran Bohacek.
The Croatian banking system is exceptionally secure but the first indications of activity and profitability growth recorded a year ago have disappeared and demand for borrowing has stopped, as a result of which the return on capital is again lower than the return on the long term state bond, according to the analysis.
Retail deposits grew but at a lower percentage than in 2011, while corporate deposits declined, which is a reflection of the crisis and the need for cash.
But the loan-to-deposit ratio is improving, said Bohacek.
Demand for borrowing is declining and for the first time since the beginning of the crisis, corporate lending is down year-on-year, while retail lending is stagnating around or slightly below zero, he added.
Loans to the state were the only lending to go up because shipyards' loans have been reclassified from corporate lending to state lending.
The growth of non-performing loans has continued this year and they currently exceed 13 per cent.
Increasing cost efficiency is limited and takes time and since loan loss provisions continue to absorb 40-50 per cent of the net results, the first possible change will occur when this ratio is significantly reduced.
Responding to questions from the press, Bohacek said the objectives for passing a financial operations and pre-bankruptcy settlement bill were excellent and that they were something Croatia had needed for a long time, namely to establish if ailing companies could survive and if not, to file for bankruptcy as soon as possible.
He said years-long bankruptcy proceedings only destroyed property and the value which could be used to collect claims, and stressed that pre-bankruptcy settlement must be justified from a business point of view.
Bohacek estimated that someone who could collect 60-70% of their claims would be motivated to write off 20-30% because that was better than if the company filed for bankruptcy.