Emerging Europe: Croatia’s banks welcome return of credit demand after six-year lull
Economic recovery encourages borrowers; fiscal consolidation revives eurozone entry talk.
Credit demand is finally returning to Croatia after six years of deleveraging, but policymakers and analysts say that a return to pre-crisis levels of lending growth is a long way off, particularly in retail.
“The household sector is still very cautious in raising new debt, despite positive labour market trends,” says Boris Vujcic, Croatia’s central bank governor. “We are seeing a recovery in lending to the segment, but it will be a slow path.” Net new lending to Croatian households rose by more than 1% year on year in March for the first time since 2008, according to central bank data. Meanwhile corporate loan growth, which returned to positive territory last May, slowed slightly after hitting a six-year peak of 3% in December.