ZAGREB, 4 March, 2021 - In 2020 banks' net profits were more than halved, while this year corporate and household lending is expected to pick up and demand for housing loans to increase, it was said on Thursday at a digital press briefing of the Croatian Banking Association (HUB).

Also presented was HUB's analysis of the banking business in 2020 and the response to the COVID-19 crisis which, it was said, resulted in a significant deterioration of banks' business results.

Net profits in 2020 dropped by 53.3% from 2019, to HRK 2.7 billion, mainly due to a drop in operating income and a growth in value corrections of financial assets --- amortisation expenses.

Net interest income dropped by 5.7% on the year, net fee and commission income by 10.5% and net business income by 9.9%. "This means that banks' income dropped a little more than Croatia's GDP in 2020," HUB director Zdenko Adrović said. Last year GDP contracted by 8.4%.

Banks' capital ratio at the end of 2020 was 24.9%, ranking them among the best capitalised banks in the world, which facilitates lending and deposit growth as well as low interest rates, he said.

Deposits and lending increased in 2020

In 2020 household deposits went up 6.1% on the year to HRK 224.5 billion, while in January 2021 they were up 7.1% on the year.

The fast deposit growth is mainly a result of giving up spending or the impossibility to spend part of one's income, said Adrović.

In 2020 household lending went up by 2.3%, with housing loans increasing by 7-8%. In Q4 alone, housing loans were up 14% on the year, while non-purpose cash loans dropped by 1% and overdrafts on transaction accounts by 5%.

Adrović said he believed that corporate and household lending would pick up in the coming period due to a rise in demand for housing loans. Part of the demand comes from the government's subsidised housing scheme and it is also due to last year's earthquakes, he added.

This year demand for housing and corporate loans is expected to improve and, thanks to existing interest rates, result in higher income and net profit for banks, Adrović said.

Last year corporate loans went up 5.3% while this past January they increased by 5.7%, he added.

Thanks to an average interest on long-term housing loans of 2.9% and no big pressure on interest growth, Croatia is doing very well, he said, noting that interest rates were markedly lower than in more developed countries which have been in the EU longer than Croatia, such as the Czech Republic, Hungary and Latvia.

(€1 = HRK 7.5)

ZAGREB, September 12, 2020 - Following the establishment of close cooperation with the Croatian National Bank (HNB), the European Central Bank will take direct supervision of eight banks in Croatia, the HNB said in a statement on Friday.

"The European Central Bank (ECB), after establishing close cooperation with Българска народна банка (Bulgarian National Bank) and Hrvatska narodna banka (Croatian National Bank) and assessing the significance of the countries’ banks, announced today that it will start directly supervising five banks in Bulgaria and eight banks in Croatia," the HNB quoted the ECB as saying in a press release.

In Croatia the ECB will be supervising the three largest banks - Zagrebacka Banka, Privredna Banka Zagreb and Erste & Steiermaerkische Bank and it will also supervise PBZ Stambena Stedionica, Raiffeisen Bank and Raiffeisen Stambena Stedionica, Sberbank and Addiko Bank.

The ECB's supervision of Addiko Bank's Croatian subsidiary is part of its plan to soon start directly supervising that Austrian banking group.

"The ECB will also directly supervise two new institutions, DSK Bank AD in Bulgaria as of 1 October and Addiko Bank AG group in Austria as of 7 October. The supervision of Addiko Bank AG group will include supervision of its subsidiaries Addiko Bank d.d. in Slovenia and Addiko Bank d.d. in Croatia," the ECB said.

The ECB in July established close cooperation with the HNB and the Bulgarian National Bank, and now it will take direct supervision of five banks in Bulgaria and eight in Croatia, countries that have both applied to join the euro zone.

In particular, the ECB will be responsible for directly supervising four Bulgarian and seven Croatian subsidiaries of existing significant banking groups headquartered in Belgium, Greece, Italy and Austria. This ensures that the ECB fulfils the regulatory requirements that it must directly supervise, at an individual level, all banks belonging to significant groups, and at least the three most significant banks in each country.

The ECB will also be responsible for the oversight of the less significant institutions and in charge of the common procedures for all supervised entities in the two countries.

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The Croatian finals of the RBA competition brought together seven innovative startups.

As Bernard Ivezic/Poslovni Dnevnik writes on the 1st of September, 2019, the fastest growing Croatian startup, Electrocoin, has been in talks of an offer with largest cooperative bank in Austria and one of the largest banks in Southeast Europe, Raiffeisen Bank (RBA), to jointly launch a "cryptocurrency".

The successful Croatian startup presented its service, known as PayCek, the first Croatian payment processor for cryptocurrencies at the Croatian finals of the Elevator Lab Challenge, organised for the first time in Zagreb by RBA and Startit.

Vedran Vukelić of Electrocoin says that with PayCek, which has attracted more than 40 businesses in just three months, they now want to go one step further and make it a tool that will bring the market a new form of cash, the so-called, cash 2.0, thus replacing the need to carry paper kuna and coins.

“We have five years of experience in the crypto world, with an average of 30 million euros in annual revenue, 5,000 active users in more than 30 countries, we work with Croatian Post, Greyp, the Red Cross, leading POS players and now we want to introduce an e-wallet that would allow you to have kuna in electronic form on your mobile phone as opposed to carrying them in a wallet,'' said Vukelić.

He added that they need RBA because, although they will use crypto technologies, they must have a deposit in the bank for every kuna they issue to their PayCek e-wallet. Instead of operating their own bank and needing very costly licenses and complex regulatory approvals, Vukelić points out, they decided to look for a partner that is already part of that world and of its core business. Electrocoin grew 932 times to a massive 206.9 million kuna from 2015 to 2017, thanks to the cryptocurrency exchange service. Last year, according to Fina, it slowed its growth down to 207.7 million kuna.

"In order to issue a crypto kuna or eHRK and allow it to be paid everywhere, we need a bank. This means that users will not need a bank account to pay for eHRK, which will significantly simplify payments, and will also allow for some new services, such as having children receive pocket money directly on their mobile phones,'' says Vukelić, adding that they want to do this, as their previous services have been done, in collaboration with domestic regulators.

Seven startups gathered in the Croatian finals of the Elevator Lab Challenge in Zagreb. Nevenka Rangelov of Startit says she is very pleased with it all, given that RBA has never organised such competitions in Croatia before.

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As Bernard Ivezic/Poslovni Dnevnik writes on the 4th of July, 2019, although for the past couple of years, mainly because of the enormous issues within and caused by the Agrokor crisis, the general speculation has been that the largest Russian bank, Sberbank, will eventually leave Croatia, and potentially even leave part of the country's closer region, but on Thursday, Sberbank clearly made it known that they're actively doing the opposite.

Sberbank has concluded an exclusive partnership with the Norwegian company Auka, and has jointly made the world premiere of a new mobile payment platform called Settle in Zagreb.

Csaba Soós, CEO of Sberbank Croatia, told Poslovni Dnevnik that in the last half a year, he has conducted a series of preparations for boosting Sberbank's business in small and medium-sized businesses and expanding its offer to the people.

"Sberbank wants to digitally transform and offer new services and new user experiences on the Croatian market, hence our partnership with Auka's Settle," stated Soós.

Settle is a mobile application that allows for easy mobile payments. For citizens, it's similar to KEKS Pay from Erste Bank, which already has more than 40,000 users, British Revolut, which has more than 20,000 users, and other such services that banks want to offer through Internet banking.

Daniel Döderlein, the founder and CEO of Auka, pointed out that this app is completely free to use.

Settle is searching for its place on the market as an alternative to POS terminals. As all cash registers in Croatia are fiscalised and connected to the Internet, Settle wants to allow for payment and invoicing straight through the internet.

"In order for a small business, a shop, a restaurant or a cafe to use Settle, it's enough for a company that offers a fiscal cash register connects with us, traders can automatically generate an QR code at the till, a Settle user can pay for it immediately from the application, and then get a fiscalised receipt as confirmation of payment,'' said Döderlein.

He added that by the end of the year, the service will be expanded to another three countries, and by the end of 2020, they want to be present on as many as ten markets. Looking at Auka's announcements, it shows that Settle's services will also expand to other aspects of business digitalisation such as e-bidding and e-invoicing.

Settle, allegedly, already has a contracted partnership in Croatia with at least four companies offering fiscal cash registers.

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As Novac/Dora Koretic writes on the 2nd of July, 2019, there's nobody in Croatia who hasn't been slightly irritated that Croatia has become known as ''ATM country" over recent days. Owing to that, many are calling for a boycott of the owners of the spaces these ugly cash machines are placed in. Dubrovnik being one of the loudest.

Residents' protests are being organised, liberal capitalists are being cursed, mayors and other people from city administrations are being called on, and the dreaded cash machines are wanted out of Croatia's many historical town and city centres.

Far from defending this proverbial plague that has seen many residents of Croatia's top tourist destinations rise up on their feet, but it is unbelievable that virtually nobody is asking the fundamental question: why is this all happening here in Croatia, and not over in Germany or Sweden? Just how and why has Croatia managed to gain the title of ''ATM country'' ahead of the far more developed countries of Western Europe?

The answer, like almost everything in life, is right in front of our noses. Jutarnji List published a story on the latest publicly available statistics from the Croatian National Bank (HNB), the one for 2017, and found numbers and data that are very ''plastic'' in explaining the general flood of ATMs into Croatia.

Simply put, Croatia is a country in which business entities continue to insist on "cash", the vast majority of them don't allow the banks and all of their modern devices, such as POS machines, to enter their premises where they sell their goods or services. Croatia just loves cash, and with that came a window of opportunity for the cash machine world.

According to the statistics of the Croatian National Bank, which were published in June last year, only 32,003 business entities were registered in Croatia in 2017 which provided a POS payment option, while 118,621 POS devices were available in the country, according to the central bank's data.

This figure seemed a bit too small for Novac, and they sent an additional query to the Croatian National Bank asking them to explain whether they included in this number of the 32,000 aforementioned business entities in hospitality, and they quickly sent back a verified answer, pointing out that the above figure applies to all businesses, regardless of what kind of business they're engaged in.

To make things worse, all companies, including very large ones such as Konzum, Lidl, Kaufland, Tommy, and others, are included in this surprisingly small number, which means that a good part of the total of 118,000 POS devices are on self-service appliances in stores.

Additionally, the figure is incredible when compared to the total number of active business entities operating in Croatia.

According to the Financial Agency's data, 158,060 active business entities were recorded in Croatia in 2018, which means, if we divide this number with the above-mentioned POS device statistics, that the POS payment option today is offered to customers by only every fifth business entity, which is a rather small figure indeed.

Given that consumers in Croatia actually have a narrower number of entities in which services can be paid for by card, it's no surprise that there is a shocking comparison between the cash rate in relation to credit card payment and various other types of card payments.

While most of Croatia is arguing about ATMs and where they're placed, Novac asked several leaders of restaurant and hospitality associations to explain just why Croatia seems to hate card payments, especially given the fact that everyone who travels outside the country knows that in most European cities and towns, cards are frequently used to pay in cafes and bars, and in some countries it's even considered to be a little weird to have customers attempting to pay for things with large banknotes.

Franz Letica, chairman of a hospitality association in Zagreb, responded, pointing out the fact that today, every high quality hospitality facility in Croatia is obliged to receive card payments as well as notes, and that he has doubts about the accuracy of the numbers and data collected from the Croatian National Bank. Others agree with him.

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As Poslovni Dnevnik writes on the 25th of May, 2019, Dinko Lucić, CEO of Privredna banka Zagreb (PBZ), which is a member of the Intesa Sanpaolo Group, is the winner of the prestigious CEO Today's Europe Awards for 2019 for his remarkable contribution to the presentation of Privredna banka Zagreb in the Republic of Croatia.

Every year, CEO Today recognises and honours the most prestigious companies and their C-level executives in today's business world. The CEO Today's Europe Awards rewards the success, innovation and strategic vision of CEO's in numerous sectors and industries across Europe (the IT sector, telecommunications, pharmaceuticals, banking and finance, energy, mobile technology and communications, transportation services, etc.). CEO Today identifies the most successful, innovative, and future-oriented company leaders.

On the occasion of the announcement, Dinko Lucić, the CEO of PBZ, stated:

"I'm extremely proud of this truly special award, which is a historical and permanent record of recognition and success of our entire PBZ Group team. One of my basic beliefs, which has been confirmed during my long-standing managerial practice, is that the real difference is the people. I'm proud of our team and on this occasion, I'd like to thank all of our employees and also all of our clients for their constant efforts to be even better and to provide the full spectrum of financial services at the highest global level.''

The CEO Today Europe team has recognised a number of achievements by Mr. Lucić and PBZ in the past twelve months. The research team looks at the attitudes of many stakeholders, including investors, analysts, employees and media professionals around the world in order to properly create the basis for their annual award.

The results are then used as guidelines for considering and publishing the best management practices and critical performance factors, as well as the determination of eligibility based on achievements, which can be revenue growth and/or profit, a successful turnaround, good performance in difficult and complex times for the economy and industry, expanding onto new markets, leading market share(s), successful M&A integration, new products and services, and new business models and strategies.

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As tportal writes on the 3rd of January, 2019, The Banker, a magazine which belongs to the Financial Times group and is issued monthly, gave two prestigious awards of recognition to the Governor of the Croatian National Bank, Boris Vujčić, for the year 2018 - one as the best European governor, and the one for the best central banker on a global scale.

The Banker has been following various financial developments across the entire world since 1926. It has been declaring the best regional governor and governor of the year on an international level each year in its January issue, and the winners are based on the magazine's editorial rating and research conducted among bankers and economic analysts.

Recognition from The Banker is guided by the criterion that the winners are those responsible for "stimulating growth and stabilising the economies in which they operate". The recognition is awarded globally, as well as regionally - for Europe, North and South America, the Middle East, Asia-Pacific and Africa. The Banker also gave recognition to the former Governor of the CNB (HNB), Željko Rohatinski, back in 2008.

In the article published by The Banker on the occasion of the award to Croatia's Boris Vujčić, his versatility was emphasised: "Seven years before Croatia's entry into the European Union in 2013, he was the deputy chief negotiator during the successful candidacy of that country for joining the European Union. He was Deputy Governor of the Croatian National Bank and has been Governor since 2012. He has recently co-ordinated central bank management and the development of the Croatian strategy for joining the Eurozone with the chairmanship of the Vienna Initiative steering committee.''

The explanation further states that the Vienna Initiative, which is less known outside of the region, was launched in 2009 at the height of the global financial crisis with a view to securing the financial stability of emerging economies with markets in Central and Eastern Europe. There was a fear that the major Western and Northern European banks, which dominated the financial systems of these countries, would withdraw from lending and cause a catastrophic credit crunch. Since then, the Vienna Initiative has spread to seventeen countries in the region, as well as to international financial institutions, the European Commission, and to several major European lenders.

The Banker cites the role of Boris Vujčić and the Croatian National Bank in ​​keeping hold of Croatia's financial and banking stability during the recent Agrokor crisis. The article also highlights the public advocacy of the governor of the Croatian National Bank for structural reforms - particularly when it comes to education, in order to create market competencies that will dominate innovation and technological progress, as well as a smart immigration policy as one of the measures to address the problem of labour shortage which is currently enfeebling the Croatian economy.

Upon receiving the prestigious recognition, Boris Vujčić said: "I'm exceptionally honoured; this is a great tribute to the Croatian National Bank, and to me personally. This award is further motivation to me to continue working on our goals - price and exchange stability, so that every citizen of the Republic of Croatia knows, with certainty, that what they earn won't lose value. We're also thinking about Croatian companies and the security of their financial operations and financing possibilities. We will continue to monitor banks in order to maintain financial stability, as well as to improve consumer rights and information.

Success in achieving our goals contributes to creating a better environment for economic growth and the development of the entire country. And finally, we believe - and in this way we'll communicate with all citizens and companies, inform and answer every question and dilemma - that our entry into the Eurozone can further stimulate economic growth and development, make our country stronger within European frameworks, and thus serve for the prosperity of every citizen of Croatia.''

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Croatian emigrants dotted all around the world sent a huge amount of money via private transfers to their families in Croatia last year.

As Jadranka Dozan/Poslovni Dnevnik writes on the 16th of November, 2018, one of the consequences of Croatia's ever-concerning demographic crisis caused by the mass emigration from the country is the growth of cash inflows through private transfers, which mostly relate to the cash flows that Croatian emigrants send back to their country of origin.

With some of this vast amount of money arriving from other European Union countries, as well as from outside the bloc, more than one billion euros have found their way from the rest of the world to various households across the Republic of Croatia in 2017, which, according to Eurostat's figures, stands at 627 million euros more than was recorded the year before.

As cash flow from other countries (by more than half from countries outside the European Union, mostly from neighbouring Bosnia and Herzegovina) has also increased, a handsome increase of more than half a billion euros; from +245 to +823 million euros, has been recorded.

The largest surplus in personal transfers to the European Union has been recorded by just four member states, but most of them are larger countries, like Portugal (+3 billion euros), and Poland (+2.8 billion euros), followed then by Romania (+2.6 billion) and Bulgaria (+1.1 billion euros). When compared to 2016, Croatia overtook both Hungary and Lithuania last year in terms of cash inflow from abroad.

Otherwise, EU residents sent an enormous 32.7 billion euros back to their respective countries of origin last year, which is, as previously stated, nearly one billion euros more than was recorded as having been sent back in 2016, along with that figure, 4.3 billion euros (13 percent of total outflow) was sent outside the European Union. At the same time, inflows into the European Union from the rest of the world reached the huge amount of 10.7 billion euros.

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Click here for the original article by Jadranka Dozan for Poslovni Dnevnik

Is an economic boost on the horizon for one leading regional producer with two manufacturing plants based here in Croatia? An extremely large cash injection might suggest exactly that.

As Poslovni Dnevnik writes on the 10th of November, 2018, Addiko European Bank for Reconstruction and Development (EBRD) and Addiko Bank have approved the DIV Group, which is otherwise the leading regional hardware and metal solutions manufacturer, a financial package of a massive total value of 30 million euro.

The funds are intended for the further investment in the long-term development of the DIV Group, with the end goal to be an increase of overall energy efficiency, the strengthening of sustainable working capital, and the restructuring of the leading group's balance sheet.

DIV Group is the leading regional manufacturer of numerous items in the wider region, and it boasts two production plants in Croatia, a well as plants in neighbouring Serbia and in Bosnia and Herzegovina. Through continuous investments in modernisation, development, new technology and staff, DIV Group has become one of the strongest producers in the entire metal industry and as a well repected and well established supplier of equipment, in the eyes of both the railway program and the automotive industry, exporting about 90 percent of its production.

Addiko Bank Croatia is well known for providing an economic boost or two, part of an international financial banking group that actively supports the growth of local businesses in Croatia, Slovenia, Bosnia and Herzegovina, Serbia, and Montenegro. As of 2017, Addiko Bank has been the sixth largest bank in the Republic of Croatia in terms of total assets.

The EBRD loan has been approved under the Direct Finance Framework, which is intended to finance the growth and development of local businesses. The European Bank for Reconstruction and Development is a leading investor in the region and has otherwise invested a huge 3.7 billion euro in Croatia, in more than 200 different projects so far.

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The trends appear to show that people in Croatia are borrowing more and more credit, mainly for housing and cash loans.

The monthly value of newly approved loans in the housing sector shows greater dynamics in terms of the credit activity of banks in this sector when compared to last year, as has been reported from the Croatian Chamber of Commerce (HGK).

As Poslovni Dnevnik writes on the 3rd of November, 2018, in the first nine months of 2018, when looked at in the sense of a year-on-year comparison, the gross value of newly approved loans in this sector was 2.9 percent higher.

The gross value of newly approved loans at an annual level during 2018's first nine months increased only in the housing sector and in loans for other purposes, while the value of newly approved revolving loans, overdrafts, credit from credit cards and consumer credits was lower than in it was during the same period last year.

The largest value of credit institution credit to the population in kuna this year is for credit on credit cards and for overdrafts on transaction accounts. Of the newly approved kuna loans with currency clauses, the highest value appears to be in regard to loans for other purposes, followed by housing loans. This can typically be looked at as housing and cash loans.

In line with the dynamics of the growth of new loans, at the end of September this year, the value of the household sector's debt increased by 3.9 percent to 122.6 billion kuna (up from December 2015). The household sector is currently the most heavily dependent on housing loans (43.2 percent of total debt) and non-purpose loans (37 percent of total debt).

The annual growth rate of total household loans has been being realised for as many as thirteen consecutive months, and interest rates on loans in this sector are at record low levels and appear to be continuing to move downward. As a result, interest rates on ''pure'' kuna loans in some sectors fell below kuna loans with a currency clause. This is the case with revolving loans and, for the very first time, with housing loans.

For the first few months, the population has been more borrowing kuna loans than kuna loans with currency clauses. The upcoming period is expected to continue the dynamics of this type of credit activity in banks towards the population in the context of real wage growth and employment.

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