At its session today, the CNB Council was briefed on current economic, financial and monetary developments in the euro area and Croatia and discussed systemic financial risks.

The total exposure of the Croatian financial system to systemic risks remained moderately elevated. Risks from the domestic environment arise primarily from a surge in residential property prices and intensive lending to the private sector, while a possible escalation of geopolitical tensions in the international environment might trigger risk materialisation. Risks in the residential real estate market mounted in 2025. Price growth picked up on the back of the sharp rise in employment and wages, tax incentives and interest rate cuts, which added to the growth in housing loans. Lending to corporates, particularly those associated with the real estate market, also rose sharply.

New macroprudential restrictions on consumer lending criteria slowed the rise in household loans in the second half of last year. The growth in non-housing loans slowed down markedly, given the stricter limits and fewer permitted exceptions in comparison with housing loans. The share of new loans with an elevated debt service-to-income ratio and loan-to-value ratio also decreased considerably. Although the banking system remained highly profitable, with a very low share of non-performing loans, in an environment of growing systemic risks, the CNB additionally increased the countercyclical capital buffer rate from 1.5% to 2%, effective as of 1 January 2027. The joint effects of these measures should mitigate the build-up of risks to financial stability and increase system resilience to adverse macroeconomic shocks.