Bank regulation costs did not change significantly in 2010. The reduction of the rate of reserve requirement by one percentage point and the drop of the deposit insurance premium rate from 0.4% to 0.32% did not have any marked effect on the formation of bank profits. In the first half of the year, this dropped by 20% over the same period of 2009. The drop in market interest rates at which the banks are financed was particularly pronounced in comparison with the crisis year of 2009, but despite this, the main determinant of profit in 2010 was represented by loan loss provisions, which is typical for a crisis period. From H1 2009 to H2 2010, loan loss reserves absorbed half of the net results prior to reservations.
For that reason, a drop in the deposit interest rate could not lead to profit stabilisation, and the rate of return on equity in banks at mid-year dropped beneath the yields on kuna bonds to only 5.6%. Despite this, banks as a whole managed to retain a high degree of stability. Profit continued to be sufficient to buffer any unexpected negative blows from the international market. If such blows do not occur, and if the forecasts that Croatia has reached the lowest point of the crisis prove correct, then banks with such a profile of balances and profitability will be able to respond to demand in the next credit cycle. In line with these claims, forecasts for the third quarter indicate an end to the downward trend of the return on equity.