The Croatian National Bank assessed the financial system’s exposure to systemic risks as moderately elevated in the first half of 2026. Rapid credit growth in the private non-financial sector and residential property price increases that outpace income growth are adding to cyclical vulnerabilities, despite support from rising disposable income and a strong labor market. Higher indebtedness could increase the vulnerability of households and banks if the economic or financial cycle weakens, while prolonged property price growth raises the risk of a sharp correction. Banks also face greater interest rate risk from long-term fixed-rate lending and debt securities holdings. Rising hedging costs are encouraging the reintroduction of loans with variable rates after an initial fixed-rate period, potentially increasing risks for consumers and, in some circumstances, banks. Geopolitical instability, military conflicts and elevated global equity valuations remain the main potential triggers for domestic risk materialization. Existing safeguards include consumer lending restrictions in force since July 1, 2025, and capital buffers, with the countercyclical capital buffer rate set to rise to 2% from January 1, 2027. The central bank will tighten macroprudential measures further if financial stability risks continue to increase.
Croatian National Bank2026-07-17
Croatian National Bank finds systemic risks moderately elevated, signals further macroprudential tightening if risks rise
The Croatian National Bank assessed systemic financial risks as moderately elevated, driven mainly by credit and residential property price growth outpacing incomes. The countercyclical capital buffer will rise to 2% from January 1, 2027, and the central bank may tighten macroprudential measures further if risks continue to increase.