In the first quarter of this year, credit developments were very favorable, and the growth of credit activity accelerated from month to month on a year-on-year basis, the National Bank of Serbia announced. The share of loans in gross domestic product is still below the long-term trend. Due to the pandemic, banks expect a drop in demand for loans.
In the first quarter of 2020, the average interest rate for dinar loans in the economy was 3.6 percent, and for those in euros 2.5 percent, the NBS said in a statement. The average interest rate for loans to households was 9.2 percent for those in dinars, and 3.6 percent for those in euros.
According to banks, the demand for dinar loans decreased during the first quarter, while the demand for foreign currency-indexed housing loans continued to grow. In conditions of increased uncertainty due to the pandemic, banks expect a decrease in demand for loans in the second quarter.
Thanks to the growth of economic and credit activity, the share of non-performing loans was reduced to 4.0% in March, which, according to the NBS, opens space for further growth.
At the year-on-year level, lending activities increased by 11.9% (in the economy by 14.5%, in the population by 9.7%). This is, as specified, “achieved thanks to the effects of the earlier easing of monetary policy, low interest rates on the international money market and increased competition among banks.”
It is emphasized that the financial support was still mainly focused on the segment of micro, small and medium enterprises, which were granted over 55% of loans. This was followed by measures due to the pandemic, it is added in the announcement.
“According to the data submitted by the banks to the NBS, 94% of citizens and 93% of the economy accepted the moratorium on loan repayment, due to the pandemic caused by the coronavirus. In addition, in the coming period, part of the Program of economic measures to reduce the negative effects caused by the COVID-19 virus pandemic and support the Serbian economy related to liquidity loans for micro, small and medium enterprises and entrepreneurs is important for credit market developments,” it is said in the announcement of the National Bank of Serbia.
It is said that this support, with a state guarantee, will be realized through the Development Fund in the amount of 200 million, as well as through commercial banks, in the amount of 2 billion euros, Kamatica reports.
