In the second quarter of this year, banks in Serbia relaxed the criteria for approving dinar loans to businesses, while slightly tightening standards for foreign currency and foreign currency-indexed loans, according to the National Bank of Serbia’s (NBS) July survey. For household loans, conditions were further eased, particularly for dinar cash and refinancing loans, with banks anticipating additional easing in the third quarter.
The survey also indicated that banks expect a moderate tightening of credit standards for the economy in the third quarter, particularly for foreign currency and foreign currency-indexed loans. Demand for loans from the economy increased in the second quarter, especially for short-term foreign currency loans, and banks project a rise in demand for all loan types in the third quarter.
Similarly, household demand for nearly all loan types grew in the second quarter, with expectations for this trend to continue. Credit standards were tightened for large companies but relaxed for farmers and small and medium-sized enterprises.
The easing of credit standards for the economy was attributed to reduced financing costs, which the NBS linked to the monetary policy adjustments of the National Bank and the European Central Bank. Conversely, reduced competition in the banking sector, increased risk perceptions, and broader economic and geopolitical uncertainties contributed to tighter standards for foreign currency-indexed loans. The easing of standards for household loans was driven by lower financing costs and market competition, though the real estate market’s situation may have influenced the steady standards for foreign currency-indexed loans.
The survey, conducted from July 1 to 12, involved 18 banks covering over 99 percent of the banking sector’s balance sheet. The NBS and its Governor Jorgovanka Tabaković have also circulated a draft decision to all banks concerning the permanent limitation of interest rates, which will be incorporated into the law.
