The assumption that banking in Croatia is highly profitable appears to be a myth after all. Even in times when the return on equity was at its highest, in 2004, it did not stand out above the average for transition countries of the New Europe. More recently, the rate of return on capital has reached a relatively low level (below 13%) by European standards, and especially by standards of transition countries, due to a decline of ROE since the end of 2004.

In 2007, the returns in banking have shown a tendency of further decline and it can hardly be expected that this trend will be stopped by additional cost savings. Moreover, limits on credit growth will further aggravate the problem. Therefore, Croatia is no longer an attractive location for banking capital. In countries with a similar or lower risk rate (e.g. the Czech Republic, Hungary) banks are able to earn higher returns. Such international comparisons are important because major banks in the New Europe belong to international banking groups whose owners and managers prefer to invest capital in markets in which it will earn the highest return.