On 20 January 2025, the European Banking Authority (EBA) launched a comprehensive stress test exercise for the largest European banks. This year's EU stress test focuses on a comprehensive assessment of the resilience of the European banking system in the currently highly uncertain and changing macroeconomic environment. The adverse scenario is based on the narrative of a hypothetical escalation of geopolitical tensions, pronounced inflationary pressures and an increase in market interest rates, which overall has strong negative effects on private consumption and investment, both at the European and global levels. The stressed severity of the adverse scenario reflects the purpose of the stress test, i.e. the assessment of the resilience of the European banking system to a hypothetical significant deterioration in the macroeconomic environment. The EBA expects the results of the exercise to be published at the end of July 2025.

In 2025, the Croatian National Bank will carry out a comprehensive stress test exercise for less significant credit institutions, those whose assets mostly do not exceed EUR 30bn, along the lines of the EBA and similarly as in 2023. The stress test will apply the EBA methodology, which will be further simplified to reflect the nature, type and complexity of the activities of less significant credit institutions in the Republic of Croatia. The primary focus will be on the assessment of credit and interest rate risk, with a simplified approach to the assessment of other risk groups. The stress scenarios applied will be equivalent to EU-wide stress testing.

Irrespective of the two-year cycle of comprehensive stress testing in Croatia and at the EU level, in 2024 the CNB also conducted thematic stress testing on interest rate risk and net interest income of less significant credit institutions in the Republic of Croatia. The results of the supervisory stress test on interest rate risk show that less significant credit institutions are resilient to possible decreases in market interest rates, which adversely affect the developments in their total net interest income. In such a scenario, projections over the three-year exercise horizon result in a decrease in net interest income at an aggregate level of 1.6% of RWA (risk-weighted assets), with no less significant credit institution reporting a negative net interest income result in such a scenario. The thematic stress test shows that less significant credit institutions currently have an adequate level of net interest income resilience that allows shocks to be absorbed in a scenario of declining market interest rates.

A press release from the European Central Bank is available on the ECB’s website.