The Croatian banking system currently has the highest ratio of capital adequacy in Europe, and can be deemed exceptionally safe. However, the first signs of growth of activity and profitability that were registered at this time last year have since disappeared. The demand for loans has been dampened in line with the somewhat weaker economic trends than expected in the second quarter of 2012.

It is no surprise that bank profits are declining under such conditions. For that reason, the rate of return on equity in Croatian banks is again lower than the yields on the long-term kuna government bonds. The return is among the lowest in comparison with European countries which did not experience banking difficulties in this crisis.

There is not a great amount of breathing room to find a policy and tactic to change this status. Increasing cost efficacy is limited and requires time, and since the reservations for losses continue to absorb 40–50% of the net results prior to reservations, it is obvious that the next changes will only take place once that ratio is substantially reduced. For now, there are no indications that such a decrease will occur soon. Finally, the arrival of such a situation depends least of all on the banks themselves.