According to unaudited preliminary data as at the end of 2020, total assets of credit institutions increased by HRK 31.4bn from 2019 (7.3%) and reached HRK 462.5bn. Assets of most credit institutions grew, with the greatest growth being registered by liquid assets (predominantly deposits with the Croatian National Bank) and loans granted.
The increase in total loans and advances was 9.1%, higher than the growth of non-performing loans, which increased by 8.2%. This resulted in a negligible decrease in the value of the relative loan quality indicator, i.e. the share of non-performing loans (NPL) in total loans. This share totalled 5.4% at the end of 2020 and 5.5% at the end of 2019. Non-performing loans in the portfolio of loans to households increased, the share of NPL rising from 5.8% to 7.1%. The share of NPLs in the sector of non-financial corporations decreased from 13.7% to 12.5%, primarily under the influence of the sale of non-performing claims.
Credit institutions’ operations in 2020 generated HRK 2.7bn in profit, 53.1% down from the profit generated in 2019. Credit institutions upped their provisions for expected losses, mirroring a potential increase in credit risk caused by the COVID-19 pandemic. The decrease in profit was followed by the decrease in profitability indicators so the return on assets (ROA) declined from 1.4% to 0.6%, while the return on equity (ROE) decreased from 9.8% to 4.4%.
In line with supervisory expectations related to the uncertainty created by the pandemic, credit institutions retained the profit generated in 2019, thus creating the prerequisites for additional strengthening of their capital and increasing the values of key capital adequacy indicators. At the end of 2020, all credit institutions boasted total capital ratios exceeding the minimum 8%, while the total capital ratio of the banking system reached 24.9%.
Credit institutions’ liquidity measured by the liquidity coverage ratio (LCR) remained high, totalling 181.9% at the end of December 2020. All credit institutions met the prescribed minimum liquidity requirements.