Comments on monetary developments

28 February 2017

At the end of January 2017, total liquid assets M4 stood at HRK 295.9bn, having fallen by HRK 5.0bn or 1.6% from the end of December 2016. At the same time, the annual growth in this broadest monetary aggregate continued at similar intensity as in the previous several months and at the end of January stood at 3.6% (or 4.7%, excluding the effects of exchange rate changes). The annual growth in M4 was achieved amid a slowdown in the growth in net foreign assets of monetary institutions (10.2%) and a modest growth in net domestic assets of the monetary system (0.4%) that was recorded for the first time after almost two years. As regards the structure of M4, both its components (money and quasi-money) shrank in January, as is common for the beginning of the year. Money M1 fell by 2.1% at the end of January from the end of 2016, but its annual growth accelerated to 19.4% (Figure 1). By contrast, quasi-money fell in January on an annual level (by 1.4%), after growing steadily throughout 2016. This was mostly due to a nominal fall in foreign currency deposits, particularly due to the appreciation of the kuna against the euro, which led to a fall in the kuna equivalent of foreign currency deposits.

Figure 1 Monetary aggregates annual rates of change	Figure 2 Placements annual rates of change based on transactions

Total placements of monetary institutions to domestic sectors (except the government) stood at HRK 219.3bn at the end of January 2017, having fallen by HRK 2.8bn or 1.3% from the end of December 2016. Placements continued to grow on an annual level (based on transactions), but this growth slowed down slightly, from 1.1% in December 2016 to 0.7% in January 2017 (Figure 2). In January 2017, the annual growth in placements to households rose to 0.9% while those to corporates slowed down to 1.5%. As regards the nominal changes, at the end of January 2017, the stock of placements was down by 3.7% on an annual basis, driven by the partial write-off of loans to households indexed to the Swiss franc in the context of the conversion process, the intensified sale of non-performing bank placements, and strengthening of the kuna against the euro (which reduces the kuna equivalent of placements indexed to the euro).

Table 1 Short consolidated balance sheet of monetary institutions
in billion HRK and %

¹ The sum total of asset items 2.2 to 2.8 of Bulletin Table B1: Consolidated balance sheet of monetary financial institutions.
² The sum total of liability items 2 to 5 of Bulletin Table B1: Consolidated balance sheet of monetary financial institutions.

Table 2 Growth of placements (except the central government) and main components
in billion HRK and %

¹ In addition to placements to households and corporates, they also include placements to the local government and other financial institutions.
² The transactions show changes excluding the effects of exchange rate changes, securities price adjustments and write-off of placements, including the sale of placements in the amount of their value adjustment.

Source: CNB.

For detailed information on monetary statistics as at end-January 2017, see:
Central bank (CNB)
Other monetary financial institutions