The countercyclical capital buffer is a releasable macroprudential capital requirement used to mitigate procyclicality in bank lending and thus reducing risks to the stability of the financial system.

Exposure to cyclical systemic risks, which usually become apparent only after the cycle reversal, increases during the upward phase of the cycle. Countercyclical buffer (CCyB) build-up in the upward phase of the cycle ensures timely allocation of additional capital. This, in turn, enables credit institutions to absorb losses and maintain lending activity more easily in the downward phase of the cycle or in case of a sudden crisis.

The countercyclical capital buffer (CCyB) is governed by Articles 227 to 237 of the Credit Institutions Act within the range of 0% and 2.5%. The CNB assesses cyclical systemic risks and determines the required CCyB rate on a quarterly basis. As of 30 June 2024, the countercyclical buffer rate applied is 1.5%. The announcement of 30 September 2025 introduced its increase to 2%, with 1 January 2027 as the date of its application, while the announcement of 30 September 2026 introduced its increase to 2.25%, with 1 October 2027 as the date of its application.

Overview of decisions on the countercyclical buffer rate

In response to the continued growth in cyclical risks from the already elevated level, the Croatian National Bank is increasing the countercyclical buffer rate from 2% to 2.25%. Since 2022, the CNB has responded to the several-year-long build-up of cyclical risks by raising this buffer rate several times (Figure 1). A rate of 1.5% is currently applied and the 2% rate announced in September 2025 will apply from 1 January 2027, to be replaced by 2.25% from 1 October 2027. A higher countercyclical capital buffer will further strengthen the resilience of the banking system to a possible materialisation of systemic risks in the event of unfavourable financial and/or economic developments. In addition, as of 1 October 2026, tightened restrictions on consumer lending criteria will apply, reducing the quota of loans that can be granted beyond the maximum prescribed ratios. The two measures complement each other, as restrictions on lending criteria slow down risk accumulation in newly-granted loans, while a higher capital buffer strengthens banks’ ability to withstand losses should risks materialise.

The short-term indicators of lending activity remain elevated, while residential property prices are growing strongly, additionally amplifying the already heightened cyclical vulnerabilities. Corporate and household loans continued to grow relatively strongly in the first eight months of 2026, albeit at a somewhat slower pace than in late 2025. On an annual level, household loans slowed down from 13.1% in December 2025 to 10.8% in August 2026, with the growth in general-purpose cash loans decelerating from 11.3% to 10.1% and that of housing loans from 15.5% to 12.4%. The slowdown mostly mirrors the base effects of the very steep growth in the first half of 2025, while short-term indictors of lending activity remain elevated. The momentum of general-purpose cash loans gained considerable strength from the end of 2025 (growing from 6.3% in December to 9.9% in August), while the momentum of housing loans remained close to the high level reached in late 2025 (at 12.5%, down from 13.9%). The momentum of corporate loans weakened noticeably in August from the end of the previous year (from 13.7% to 0.1%) as the strong growth in these loans in spring 2026 is excluded from the calculation. On an annual level, the growth rate of corporate loans slowed down only slightly in August from the end of 2025 (from 12.8% to 11.3%); the largest contribution to this growth came from loans to corporates dealing in real estate, trade and accommodation and food service activities.

Residential real estate prices continued to grow more strongly than their macroeconomic determinants, such as income or construction costs. They grew by 14.3% year-on-year in the first quarter of 2026, after growing by 14.1% in 2025, faster than in most EU member states. As employment and wage growth slowed down in the same period, the gap between the pace of growth in real estate prices and household incomes widened further, while housing affordability deteriorated (see Financial Stability No. 27). Lower interest rates on housing loans and tax incentives for house purchases also contributed to price growth.

The credit-to-GDP gap indicators and the composite indicator of cyclical systemic risk further increased in the first quarter of 2026, with the composite indicator reaching its highest level since the start of the calculation (Table 1). The relative indebtedness of the domestic private sector, measured by debt-to-GDP ratio, increased, widening the credit gap specific for the Republic of Croatia^[1] (Figure 2) and keeping credit gap indicators at very high levels in the first quarter of 2026. The growth in the composite indicator, comprising a broader set of indicators of cyclical risks, mostly reflects strong credit activity, which, coupled with slower income growth, increases the debt burden of households and corporates, as well as a possible underestimation of risks in the banking sector (Figure 3). The benchmark rates derived from these indicators range from 1.97% to 2.50% (Table 1) and point to the need for further rate increases. By raising the countercyclical buffer rate to 2.25%, the CNB continues to gradually adjust the buffer to the level of cyclical risks.

The domestic banking system is relatively highly profitable and has sufficient capital to meet higher capital requirements, so that their increase should not affect the cost and availability of bank financing. Banks are still relatively highly profitable, with the annual rate of return on assets and return on equity standing at 1.6% and 15.3%, respectively, at the end of June 2026. Banks’ capital surpluses have decreased somewhat over the past few years, largely due to the strong growth in exposures and the increase in capital requirements. However, at system level, they still stood at 2.85 percentage points above prudential and resolution requirements at the end of June 2026. The strengthening of the banks’ capital position by means of a countercyclical capital buffer increases their ability to withstand losses and to continue lending to the domestic non-financial sector in the event of a sudden shock or unfavourable macro-financial developments.

The CNB will continue to monitor closely the evolution of cyclical vulnerabilities in the light of domestic and global economic and financial developments and will adjust macroprudential measures as needed so as to achieve their optimal combination. Depending on the circumstances, this may include further increases in the countercyclical buffer rate if cyclical risks grow even more, but also its immediate release (in full or in part) or the abandonment of the announced increase in the event of a significant deterioration in economic and financial conditions, as well as the additional adjustment of other macroprudential measures.

Table 1 Indicators of cyclical systemic risk and the associated benchmark countercyclical buffer rates for Q1/2026

Notes: Specific ratio values differ depending on the definition of credit (48.6% for a narrow definition of credit, which includes only domestic bank credit, and 60.5% for a broad definition). Differences in gap values arise from different definitions of gap (absolute gap is calculated as the difference while the relative gap is calculated as the ratio of the following variables: the credit-to-GDP ratio and its trend) and estimated statistical trends. The arrows indicate the direction of the change in relation to the value of indicators and benchmark rates from the previous quarter.

Source: CNB.

Figure 1 Countercyclical buffer rates

Notes: The shaded area indicates the period from the 3rd quarter of 2026 to the 4th quarter of 2027, when the new rate enters into force.

Source: CNB.

Figure 2 Range of credit gap indicators and affiliated benchmark CCyB rates

Notes: The left panel shows the Basel gap (blue curve) and the range of 12 credit gap indicators which have better signalling properties for the Republic of Croatia than the Basel gap. The red shaded areas indicate the range of absolute gaps, the black shaded areas indicate relative gaps, and the dark red areas indicate overlapping. The credit gap is estimated up to the last available quarter (t); however, due to the characteristic of one-sided HP filtering, which makes the last estimated value subject to revisions upon the arrival of new data, its trend up to the quarter (t-1) is shown. The right panel shows the range of CCyB rates calibrated on the basis of the gaps in the left panel. The blue dashed curve indicates the calibration based on the Basel gap given in the left panel. For details on the methodology used to estimate credit gaps, see Box 2 Improvements in the methodology of countercyclical buffer identification and calibration in Croatia, Macroprudential Diagnostics No. 16.

Source: CNB.

Figure 3 Composite indicator of the cyclical systemic risk (ICSR) and the affiliated range of benchmark CCyB rates

Notes: CI indicates credit institutions. The lower threshold for the calibration of the CCyB rate has been chosen to enable the rate to become positive before indicators included in ICSR calculation (Figure 3.a.) reach median level, while the upper threshold is determined by the highest percentiles of ICSR distribution.

Source: CNB.

1. Credit gap measures the deviation of the relative indebtedness of the private domestic sector relative to the long term trend of indebtedness. One of the measures of the credit gap is the Basel credit gap, identified by the European Systemic Risk Board in its recommendation ESRB/2014/1 as the reference starting point for determining the required level of the countercyclical buffer rate. In addition to the standardised Basel indicator, member states are also advised to use other indicators of credit gap that can better reflect the dynamics of the financial cycle in their countries. The indicators of the credit gap specific for the Republic of Croatia have been selected on the basis of their better ability to predict financial crisis in the Republic of Croatia than the standardised Basel indicator. For more information on the methodology for determining specific credit gaps for the Republic of Croatia, see Box 2 in Macroprudential diagnostics No. 16 and CNB Working Papers I-69 New Indicators of Credit Gap in Croatia: Improving the Calibration of the Countercyclical Capital Buffer, 2022. ↑