In the first six months of 2023, the banking sector in Serbia achieved a net profit before taxation in the amount 607 million euros.
This is the response of the National Bank of Serbia to Danas’ inquiry regarding the operations of banks in the first half of the year.
How much money is involved can be seen when compared to the results of previous years. For example, in the first half of last year, banks earned a profit before tax of 317 million euros, which is a growth of 91.5 percent in one year.
Compared to the first half of 2021, this year’s pre-tax profit is 2.68 times higher.
Last year, banks earned 742.4 million euros for the entire 12 months, which is a record amount of profit for banks in Serbia.
As stated in the NBS reply, the structure of the results, as in all previous years, is dominated by net income from interest and fees, i.e. income from regular operations.
They find that the growth of net interest income was largely influenced by the increase in reference interest rates of the European Central Bank and the National Bank of Serbia due to the fight against inflation. However, the NBS highlights the effect of credit activity and the increase in the costs of implementing a tighter monetary policy.
“Namely, the NBS pays interest to banks on deposited excess liquidity and reverse repo transactions, which temporarily withdraw excess dinar liquidity in order to curb inflationary pressures.” On this basis, 30 percent of the year-on-year growth in net interest income of the banking sector was achieved in the first six months of 2023,” the NBS said in its response.
Although the central bank did not explicitly say how much it paid to the banks in the name of interest on the basis of repo auctions, from the report on these auctions it can be seen that the banks earned about 90 million euros in the first six months by buying one-week NBS securities.
The NBS further explains that in addition to net income based on interest, net income based on fees and commissions also contribute to the structure of the net result, which, considering the effects of the measures taken by the NBS in August 2022, recorded a slight increase, and which is for the most part a consequence of the continuous growth of the volume of transactions, primarily through modern payment methods – cashless transactions and payments over the Internet.
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