ZAGREB Feb 13 Croatian banks' profits in 2013
were down nearly 70 percent on the previous year due to higher
bad debt provisions and a more conservative valuation of their
assets, figures published by the country's central bank showed
The banks' pre-tax profit amounted to 1.02 billion kuna
($181.1 million), down from 3.36 billion kuna in 2012.
Non-performing loans stood at 15.6 percent of all loans at the
end of last year, with 28 percent of corporate sector loans
classified as bad.
"We are witnessing a rise in the level of reservations
(provisions) and a more conservative assessment of the banks'
assets," vice-governor Damir Odak told reporters.
The central bank expects a further rise in bad loans this
year, but at a slower pace. At the end of 2012, the level of
non-performing loans amounted to 13.9 percent.
Croatia, which joined the European Union last year, has had
five straight years without economic growth.
Odak said that despite negative trends the banking system
remained stable with the capital adequacy ratio surpassing 20
"Even if all the bad loans were written off, which will not
happen, the average capital adequacy of Croatia's banks would
remain above the required level, or at around 13 percent," he
Bad debt provisions were increased following the
introduction of a more prudent regulation by the central bank
last year. Changes in the assessment of the banks' s assets -
such as loans and real estate - were prompted by the banks'
parent companies and auditors, Odak said.
Around 90 percent of Croatia's banking sector is owned by
banks from EU countries including Italy, France and Hungary.
For example, Zagrebacka Banka, Croatia's largest bank, is part
of Italy's UniCredit group.
Half of the country's 30 banks suffered a pre-tax loss last
year, according to figures based on reports the commercial banks
submitted to the central bank.
Croatia's second biggest bank, Privredna Banka Zagreb,
majority owned by Italy's Intesa Sanpaolo group, made
the highest profit, amounting to 792.1 million kuna.
($1 = 5.6336 Croatian kunas)
(Reporting by Igor Ilic; editing by Zoran Radosavljevic and