With all the economic problems, year 2010 also led to a drop in credit and debt. Something like this last time happened in early 2000 and analysts estimate that a significant increase in demand could come only in one year.
National Bank of Croatia reported that at the end of February total loans of commercial banks amounted to more than 250 billion, which is something fewer than 1% less than same time last year. A decline in loans to financial institutions and individuals contributed to this decline.
In February, decline of credit to households continued for the fifth month in a row, and they were eventually totaled to about 120 billion, 3.5% lower than at the end of the same month in 2009. Analysts believe that the reason behind this is the growth of unemployment and reduction of income due to falling wages. Housing loans, which account for about 40% of total loans to households, still recorded an annual growth, but only 0.2%.
The annual growth rate of loans to enterprises fell to just over 1%, and their amount at the end of February is about 100 billion.
Lending to the government in early 2009. reached almost record amounts of growth. Towards the end of the year the need to fund reduced and so did the loans from domestic banks, so the growth rate became less and less. Thus, at the end of February loans to the state totaled about 30 billion, which is almost 4% more than in February 2009.
Analysts believe that government incentives for buying a first property could only slightly improve the demand for housing loans, but without an increase in employment there will not be a true recovery in loans market. The growth of seasonal employment during the summer could increase demand for short-term loans, but this is questionable because of the pessimism that prevails among Croatian citizens.
Since the situation is worse in domestic firms because of the crisis, rapid financial recovery and increased demand for loans in the economic sector is not realistic. However, measures of financial assistance by the Government might improve the situation a bit.