Total deposits held by commercial banks in Croatia increase to HRK 304bn

ZAGREB, April 28 (Hina) – Total deposits held by commercial banks in Croatia reached HRK 304 billion at the end of February 2020, increasing by 7.1% from February 2019, their largest year-on-year increase since 2008, data from the Croatian National Bank (HNB) show.

The increase was the result of a continued rise of demand deposits, which include money in transaction accounts and banks’ obligations arising from kuna payment instruments issued.

At the end of February, demand deposits reached HRK 108.5 billion, accounting for 35.7% of total deposits. They had continued their rise at two-digit rates since 2015, increasing by HRK 20 billion or 22.6% since February 2019.

This is due to low-interest rates on time deposits and a disinclination to invest in other forms of financial assets, which resulted in surpluses of disposable income being gradually channelled into the most liquid forms of deposit, analysts at Raiffeisen Bank (RBA) said in their comment on the HNB data.

Total savings and time deposits, both in the domestic and foreign currency, increased by HRK 100 million or 0.1% year on year to HRK 195.5 billion, after decreasing for 10 months. Over 80% of the deposits were foreign currency deposits, mostly those denominated in euros, held by households.

The likelihood of a decline in future household disposable income and the difficulties faced by the real sector might slow the growth of total deposits with the banks, RBA analysts said, adding that nevertheless, they expected a rise in demand deposits because of the low-interest rates, the high inclination towards holding liquid assets and the disinclination towards investing in other financial assets.