Loans in the national currency, the kuna, continued to grow along with deleveraging in foreign currency-denominated loans, so that the share of kuna loans in the total loans in this sector reached 44.1 percent, analysts at Raiffeisenbank Austria (RBA) said in their comment on the HNB data on Tuesday.
Total loans stagnated compared with April 2016, after steadily declining since July 2015.
RBA says that people have become more aware of foreign currency-related risks after the conversion of Swiss franc-denominated loans into euro loans, which together with a fall in interest on kuna loans led to a rise in the share of kuna loans in the household credit portfolio.
RBA analysts noted that general purpose cash loans were the only group of household loans that had seen annual growth.
With a monthly increase of HRK 326 million or 0.8%, general purpose cash loans rose by HRK 1.6 billion or 3.9% compared with April 2016. "Their share in the total household loans was 35%, ranking second, immediately after housing loans which accounted for 44% of the household loans," the RBA report says.
At the end of April 2017, housing loans totalled HRK 51.9 billion, or 1.1% less than in April 2016. RBA analysts noted an increase in the volume of kuna-denominated housing loans to 22%, although euro-indexed loans prevailed, accounting for 75% of housing loans.
After the conversion of CHF-denominated loans into euro loans, about HRK 1.3 billion worth of loans, or less than 3%, remained indexed to the Swiss franc.
"We believe that the process of household sector deleveraging is drawing to a close and that indications of credit demand recovery should have an effect on credit activity returning to this sector. However, we expect the recovery to be very modest and largely dependent on movements on the labour market which is still not showing more significant growth of employment, which in turn is a precondition for taking on new financial obligations," RBA said.
(EUR 1 = HRK 7.389352)