Croatia: Banking sector remains stable and profitable
Overview:
Banking sector results for the first three quarters of 2011 show that it remains profitable and well capitalised even if profitability is less than in some other countries. Aggregate profits increased by 9% on the corresponding period of last year. However, performance was variable with the big four continuing to take a disproportionately large share of overall profits. Capital adequacy remains high with all 33 banks above the 12% demanded by the HNB. Return on equity for the sector is recovering. The Croatian banking sector has proved more stable than many during the crisis on this and other measures. However, its profitability is lower than in some of its peers. Again performance varies widely across banks. Some consolidation of the sector would seem likely given an abundance of tiny and barely profitable banks.