engleski

Evaluation of Sustainability of the Croatian Banking Sector Business Model by Analysing Banking Profitability

Banks are the most important financial institutions worldwide. Stability, profitability and efficiency of the banking system contributes to the growth of the overall economy. Banks’ performance is determined by internaland external factors. Recently, their business activity faced new competition and regulatory changes due to the financial crisis and the ever-growing usage of technology. All of which require restructuring and redefining of their business model. The article aims to analyze key factors of banks’ profitability in the Republic of Croatia from 2004 to 2016, with special focus on differences in the structure of balance sheets and income statements between small, medium and large sized banks, and also profitable and non-profitable banks. Preliminary analysis of banking profitability indicates that the business results of non- profitable banks, and especially small sized banks, are not primarily influenced just by the non-performing loans, but also by higher presence of general and administrative costs. This knowledge indicates that it is necessary to reconsider sustainability of the banks’ business model in Croatia due to their importance for the financial sector and economy.

Banking Performance, Croatia, Financial Crisis, Business Model, Contemporary Changes

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