Favorable trends in the credit market in Serbia

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Developments in the credit market were very favorable in the first quarter, with the growth of credit activity accelerating year on month from month to month, according to the report on credit activity of the National Bank of Serbia (NBS) for the first three months of this year.
The growth of credit activity in March, after excluding the effect of the change in the exchange rate, amounted to 11.9 percent. Such trends are the result of the acceleration of the growth of loans to the economy by 14.5 percent year on year, while the growth of loans to households amounted to 9.7 percent year on year, which indicates that credit activity does not pose a risk to price or financial stability.
Financing conditions in the domestic market remained favorable, thanks to the effects of earlier monetary easing, low interest rates in the international money market and increased competition among banks.
Thus, the average interest rate on loans to the economy in dinars at the beginning of 2020 was lowered to a new minimum and additionally approached the interest rate in euros, while interest rates on loans to households were close to the previously recorded lowest values.
In the first quarter, loans to the economy achieved an unusually high growth for this period of the year of 485 million euros. Financial support was still mainly focused on the segment of micro, small and medium enterprises, which were granted over 55% of loans.
In the first quarter, loans to households increased by 158 million euros, managed, as before, by cash and housing loans. At the same time, the growth of housing loans was 57 percent higher than in the same period last year.
At the end of March, in nominal terms, dinar placements accounted for 33.2 percent of the existing total placements to the economy and the population, according to the NBS report.
Thanks to the growth of economic and credit activity, the share of problem loans in total loans was further reduced in 2020 and amounted to four percent in March. This is the new lowest level since this asset quality indicator is monitored, which at the same time further strengthens financial stability and opens space for further credit growth.
The report points out that in mid-March, the NBS made a decision to introduce a moratorium on the repayment of credit obligations and obligations based on financial leasing for at least three months, which provided direct support to the economy and citizens. According to the banks, 94 percent of citizens and 93 percent of the economy accepted the moratorium on loan repayment, Dnevnik reports.