Croatia
The following data have been gathered by Capgemini and are part of the World Retail Banking Report published annually in March.
Macro economic indicators (2006)
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GDP at current prices and PPP
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€ 34 billion
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Inhabitants
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4.41 million
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GDP per head
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€ 7,638
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Economic growth rate
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4.8%
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Consumer confidence indicator
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-22
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Unemployment rate
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12.0%
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Consumer Price Index
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3.2%
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Banking staff
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19,096
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Number of branches
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1,118
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Number of ATMs
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2,649
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Households savings ratio
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2.0%
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Inflation rate
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3.2%
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Interest rate, consumer credit
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9.50%
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Interest rate, residential mortgage
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5.50%
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Interest rate on long term bonds
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4.10%
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Type and size of players
Net banking income 2006 (in million € )
Products
% Total banking assets
Loans and deposits
Credit activities
In 2006 Banks granted credits to a total amount of € 25.6bn (both in HRK and in foreign currency); 23.6% increase compared with the previous year.
Deposits
Banks were very active in deposits collection. Total deposits increased to € 27.5bn or 18.2%.
New technologies, credit and debit card transactions
Croatian banks continue to invest in technology development in order to increase the number and quality of financial products and services. Card transactions have become an increasingly important sphere of business for Croatian banks in the past few years, and bank clients have recognized the advantages of using cards.
Some new introduced products in 2006
Chip cards (EMV platform);Co-Branded Cards; E-banking, m-Payments; Multiple types of mortgage loans; Drive-in ATMs; Enhanced ATM services (e.g. recharge of the mobile prepaid card, deposits, statement services); Share trading and high yield savings linked to bonds/investment funds; Consumer loans for house refurbishing and repairing; Product Packages
Trends
Regulatory Changes
In December 2006, HNB announced further tightening of regulations. Effective from January 2007, the growth of the banks’ loan portfolios is restricted to 12 percent per annum. Any excess of the growth rate must be followed by mandatory purchase of low-yielding HNB bills in the amount of 50% of the excess placement.
Competition environment
• Major Banks in private foreign ownership have retained their dominant positions in all business segments
• Increase of capital carried out, sharp competition and slowing down of the net income growth showed the effects, Banks´ ROAE decreased to 12% or 9%.
• Banks continue to compete with new products and services showing raise in fee income and income from other services such as credit cards, investment banking.
• In meanwhile, two main sources of funds for Banks´ growth were more barely available: foreign funds become more expensive due to HNB restrictions and domestic funds (client deposits) were channelled into investment funds and stock market.
• Latest acquisitions: Hungarian OTP Group (Nova Banka) end of 2005; Société Générale (Splitska Banka) in 2006; Bayrische Landesbank (Hypo Alpe Adria Bank Group) in 2007.
Customers
• Customers are becoming more demanding in terms of product offerings. • At the end of 2006 IPO of INA introduced the significant number of small individual investors at the money market. This moved the small private investors into different dimension, from non risky savings to taking certain risk for investments such as securities (followed by IPO of HT in Sep 2007)
• Loans to retail customers remain a key business, but most Banks have started to target SME businesses as an untapped revenue segment.
Product trends
• Most Banks offer credits in domestic HRK and EUR/CHF (value clause); Consumer loans have become highly popular among the customers.
• Payments services still represent the highest revenues for core banking services in Croatian banks.
• Banks are focused to innovative and retail clients oriented products and services and they strongly compete with each other.
• The significant activities in investment banking means for Banks greater competition regarding funds sources and as a consequence new credit activities (margin credits).
• Packages of products and services are being introduced to the market.
