Croatian banks expect moderate growth of real estate loan portfolio - KPMG

Croatian banks expect moderate growth of real estate loan portfolio - KPMG Author: Ken Teegardin. License: Creative Commons, Attribution 2.0 Generic.

ZAGREB (Croatia), October 12 (SeeNews) - A majority of Croatian banks forecast a moderate increase of the real estate loan portfolio size of the banking sector as a whole in the next 12-18 months, while viewing their own portfolios with some pessimism, consulting firm KPMG said.

As many as 40% of banks expect an increase in their own real estate loan portfolio size, while 20% forecast a decrease and the remainder expect no change, KPMG said in its Property Lending Barometer 2017, a survey of banks on the prospects for real estate sector lending in Europe.

Out of the surveyed banks, 40% considered real estate financing moderately important, while the remainder saw it either as less important or unimportant.

Nonetheless, 25% of the surveyed banks reported that there is an increase in the sharpness of focus on real estate financing within the banks' lending activities compared to the previous year, while the remaining 75% said that the level has not changed.

"Croatian banks surveyed are generally open to both financing income generating properties and providing development financing, slightly favouring the latter", KPMG said.

In the last 12-18 months, half of the volume of real estate loans provided by the surveyed banks was lent to finance new developments, while the other half was provided for income generating projects.

The average loan size in 2017 was between 4 and 6 million euro ($4.7 million-$7.1 million), while the preferred loan size is between 5 and 7 million euro.

In terms of provisions, their level against real estate loans is seen as adequate by 60% of the respondents, 20% estimating the provisions as too high and the remaining 20% stating they are too low, KPMG noted.

KPMG also said that Croatia's real estate market recorded high investment volumes in 2016, continuing the upward trend which started in 2015. According to KPMG, the volumes will grow further this year, with tourism companies planning to invest around 500 million euro, up 135 million euro on 2016.

($=0.844066 euro)

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