In 2020, the Croatian Bank for Reconstruction and Development supported Croatian businessmen with an amount of almost HRK 8 billion, which is 13 percent more than in 2019, as disclosed in the audited annual financial statements of HBOR for last year. In total, HBOR supported more than 1,800 projects of Croatian entrepreneurs in 2020. Last year, HBOR approved  43 percent of the total amount of loans approved by banks in Croatia to business entities under the COVID-19 Measures. In order to mitigate the consequences of the pandemic, HBOR put almost half of the total gross loan portfolio in a moratorium that entrepreneurs could use for up to 16 months.

 

HBOR’s operations in 2020 were marked by activities related to mitigating the negative consequences of the COVID-19 pandemic on the operations of Croatian businessmen. Already at the end of March, the first COVID-19 Measures for preserving the liquidity of companies and jobs were introduced.

 

“2020 was extremely challenging for us, not only because of the pandemic, but also because of the earthquake that severely damaged our headquarters. In such a year and in the changed working conditions, HBOR approved as much as 43 percent of all COVID loans in Croatia. This share is especially important if we take into account that it accounts for only 2 percent of employees and 6 percent of assets in the banking system,” said the President of HBOR’s Management Board, Tamara Perko, on the occasion of the disclosure of the annual report.

 

Under the COVID-19 Measures, entrepreneurs were enabled to use the moratorium for up to 16 months and to reschedule existing obligations. During the approved moratorium, HBOR charged neither regular interest nor fees to its clients, and the clients were allowed to use the moratorium despite the fact that HBOR was still obliged to regularly settle its obligations to creditors without the possibility of using the moratorium.

 

The offered possibility of using the moratorium was accepted by clients for more than 1,600 approved loans, by which the principal in the amount of more than HRK 12.8 billion was put into grace period. The amount of principal put into grace period represents almost half of the total gross loan portfolio of HBOR, which as at 31 December 2020 amounted to HRK 27.4 billion.

 

Within the COVID – 19 Measures, HBOR, directly and in cooperation with commercial banks, provided loans to entrepreneurs at an interest rate already from 0 percent and without usual fees. By the end of 2020, under loan programmes within the framework of COVID – 19 Measures, HBOR approved almost HRK 1.3 billion in loans, which is 43 percent of the total amount of loans approved to entrepreneurs under the COVID-19 Measures during 2020.

 

In order to encourage commercial banks to approve new liquidity loans to entrepreneurs, within the framework of COVID-19 Measures, HBOR introduced new manners of securing loans and issuing guarantees, by which up to 90 percent of the loan repayment risk is assumed. In addition to HBOR’s insurance, banks approved HRK 1.24 billion in liquidity loans to entrepreneurs in 2020.

 

Small and medium-sized enterprises – most of HBOR’s loan beneficiaries; exporters supported by HRK 4.7 billion

In addition to approvals under the COVID-19 Measures, HBOR continued to implement all its current loan programmes for investments and working capital, financial instruments, programmes for export credit insurance and promoting the development of the venture capital market, as well as other activities.

 

Due to the circumstances caused by the pandemic, 2020 was marked by the use of moratoriums and loans for preserving the liquidity of companies. However, even in these conditions, more than 50 percent of HBOR’s approvals were intended for investments. The share of approved loans for investments is important, because they are investments aimed at developing a particular area, increasing the competitiveness of entrepreneurs, investing in new technologies and production, as well as creating new jobs.

 

The most numerous beneficiaries of HBOR’s loans in 2020 were small and medium-sized companies, to which 1,168 loans were approved, i.e. 88 percent of the total number of approved loans. During 2020, HBOR supported Croatian exporters in more than 800 projects with a total amount of almost HRK 4.7 billion.

 

Development of equity investment market

A number of analyses indicate that, due to the poorly developed venture capital and equity market, Croatian micro, small, medium and mid-cap companies face the challenge of finding appropriate sources of finance. Therefore, HBOR has launched a number of initiatives to develop this market in order to provide adequate sources for helping entrepreneurial activities grow.

 

In 2020, two new venture capital funds started to operate under the CROGIP programme and preconditions were created for the start of the third one. Under the Fil Rouge Capital (FRC2), venture capital fund established in 2019 with HBOR’s support, more than 80 investments in start-ups have already taken place. Due to the consequences of the pandemic, the need for funds for investing in venture capital or quasi-venture capital is expected to further increase, and HBOR’s activities will remain focused on filling this market gap also in the coming period.

 

Financial results

In 2020, HBOR recorded total income in the amount of HRK 657.97 million, expenditures in the amount of HRK 578.63 million and profit in the amount of HRK 79.34 million. HBOR’s profit in 2020 is HRK 75.71 million lower than in 2019, a decrease of 49 percent, which was most significantly due to the increase in impairment losses and provisions compared to 2019 as a result of the expected increase in credit risk on the part of clients as a consequence of the COVID-19 crisis as well as of the reduction in interest income due to lower interest rates.