ZAGREB, Feb 3 (Reuters) - Bad loans in Croatia rose to 7.6 percent at the end of 2009, but the banking system remained stable with a high capital adequacy.
"Bad loans almost doubled in 2009 and surpassed 7.6 percent at the end of December. The costs of reservations rose by 2.3 billion kuna, while pre-tax profit in the banking sector fell by 25 percent," the central bank said in a statement after its board's monthly meeting.
Local banks, which are more than 90 percent in foreign hands, posted pre-tax profit of 3.4 billion kuna ($651.2 million) in 2009, which is 25 percent less than a year before.
The central bank also said that nine out of altogether 39 banks and savings banks recorded losses. In 2008 there were five such banks.
"The average capital adequacy rate remained on a relatively high level of 15.7 percent," the central bank said.
The bank's board also said that those figures showed that the banking system managed to preserve stability in the difficult economic circumstances, but also that its business results were closely linked with developments in the real economy.
"That's why the banks should give their contribution to revival of the economy instead of focusing on their short-term gain reflected in calculating as high interest rates as possible," the statement said.
Croatia's economy contracted some six percent in 2009 and for this year the government and the central bank foresee a mild recovery of some 0.5 percent. Most analysts are sceptical and forecast a contraction of up to one percent.
The central bank trimmed on Wednesday the mandatory reserves requirement rate on commercial banks by one percentage point to 13 percent and thus freed up some 2.9 billion kuna to boost liquidity and help the government's measures to spur growth.
(Reporting by Igor Ilic, edited by Patrick Graham, Ron Askew)