Photograph: Photo by gosiak1980, used under CC0

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.

Related stories

Bank lending down 0.6% y-o-y

Bank lending down to HRK 267bn in May

Household deleveraging continues for 11 months in row

Lending in June down 4.8 pct y-o-y

Lending in Feb down EUR 2.1b year on year

Lending lowered by 15 bn kuna in April

Latest news

Bomb explodes outside police officer's home in Northern Ireland

A bomb exploded outside a police officer's home in Northern Ireland on Wednesday but there were no immediate reports of casualties.

Denmark to charge man with blasphemy over burning Koran

Danish prosecutors said Wednesday they have opened a rare blasphemy case against a man who videotaped himself burning a copy of the Koran.

South Africa to raise taxes for the wealthiest

South Africa will raise the income tax rate for the country's wealthiest to 45 per cent from 41 per cent, Finance Minister Pravin Gordhan announced Wednesday.

French centrist leader offers conditional support to Macron

The leader of France's centrist Democratic Movement party, Francois Bayrou, said Wednesday he was willing to support reformist former economy minister Emmanuel Macron in the country's upcoming presidential election.

Amnesty International warns of nationalist rhetoric and hate speech in Croatia

Croatia continues to have problems with discrimination against ethnic minorities and with freedom of the media, while heightened nationalist rhetoric and hate speech during election time contributed to growing ethnic intolerance and insecurity in the country, global human rights watchdog Amnesty International said in its annual report on the state of human rights in the world in 2016/2017.

Official assigned to Wilders' security team held by Dutch police

A security official assigned to protect Dutch far-right politician Geert Wilders is being held by police on suspicion of passing along classified information about the lawmaker to a Dutch-Moroccan crime gang.

Italy's 'Red Thing' could make impact in election debut, polls show

Two polls conducted for RAI public broadcaster released Wednesday showed a new entity that split from Italy's ruling Democratic Party

Council: Nixing grants to "Novosti" would cause far-reaching implications

The Council for National Minorities, a state-level autonomous umbrella organisation for all ethnic minorities in Croatia, has stated that the cancellation of financial grants to the "Novosti", a newspaper of the ethnic Serb minority, would produce far-reaching implications and stir criticism for reduction of free speech and of freedom of expression of the most numerous ethnic minority.

Russia to build replica Reichstag for schoolchildren to storm

A military-themed park in a suburb of Moscow will soon install a replica of Berlin's Reichstag for Russian schoolchildren to storm, Defence Minister Sergei Shoigu said Wednesday.

Alitalia strike set for Thursday, hundreds of flights cancelled

Employees of Italy's loss-making airline Alitalia will go on strike Thursday, air transport unions confirmed, after government talks with both sides failed to break the deadlock.

EU calls on Germany to reduce large current account surplus

The European Commission on Wednesday called on Germany, the bloc's biggest economy, to reduce its large current account surplus and focus on boosting domestic consumption.

Germans' demand for Croatian destinations on steady rise

Bookings for Croatia's destinations in some regions of Bavaria have been rising and some statistics show a 30% increase year-on-year, according to the preliminary information from the "" fair for leisure and travel, which opened in Munich on Wednesday and runs through Sunday.