Loans issued by Croatian banks by the end of July 2016 totalled HRK 263.5 billion, 6.4% or HRK 18 billion less than in July 2015.
This is a continuation of an annual decline in lending that has been present, with sporadic interruptions, since the end of 2012, Raiffeisenbank Austria (RBA) analysts said, noting that the 6.4% decrease was the highest so far.
On the month, lending in July was HRK 1.2 billion or 0.5% lower.
"The relatively strong annual drop in lending is partly due to the conversion of loans pegged to the Swiss franc, that is, a partial write-off of such loans and the continuation of household deleveraging, with household loans totalling HRK 117.5 billion at the end of July. Household loans dropped HRK 700 million or 0.6% on the month, and household deleveraging continued also on the year, for the 13th consecutive month," the analysts said.
Household loans were HRK 9.3 billion or 7.4% lower than in July 2015, and their share in the overall structure of loans dropped to 44.6%.
Corporate deleveraging continued as well, with corporate loans totalling HRK 86.1 billion, down 790 million or 0.9% on the month and 4.8 billion or 5.2% on the year, continuing the negative trend that started in mid-2012.
With a share of 19% in all loans, lending to the central government at the end of July amounted to HRK 51.2 billion, up 200 million or 0.4% on the month but down 3 billion or 5.5% on the year, which is the steepest decrease since September 2014.
RBA analysts said that despite an economic recovery and an increase in real wages and available income, household borrowing was not expected to improve significantly by the end of the year. Corporate borrowing on the domestic market is still restricted by relatively low economic activity, the analysts said, noting that kuna-denominated loans were expected to increase due to lower interest rates.