Croatian National Bank warns of real‑estate‑driven shock to banks

The Croatian National Bank (HNB) says that cyclical vulnerabilities are deepening in Croatia, largely because residential property prices rose 14.1% last year and demand remains high.

Executive director of the Financial Stability sector Maja Bukovšak warned, "Everything revolves around the situation on the real‑estate market and the high demand that fuels it," adding that banks are becoming less able to absorb sudden shocks despite remaining well capitalised. She noted that record dividend payouts are narrowing capital buffers.

HNB’s macro‑prudential policy response includes raising the counter‑cyclical capital buffer to 2% from next year and tightening credit‑granting criteria introduced in July 2023. In the first seven months of the new rules, credit growth slowed, especially for non‑housing loans, while housing‑loan approvals fell to about 1,800 per month, close to the long‑term average.

The bank also highlighted geopolitical turmoil as a continuing global risk to financial stability.