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In the second quarter, the slowdown in bank credit activity continued

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The lending activity of banks towards the non-monetary sector, observed on an annual basis, continued to slow down during the second quarter, according to today’s report of the National Bank of Serbia (NBS) on trends in lending activity in this period.

It is specified that the year-on-year growth of loans to this sector in June amounted to 0.8 percent, while loans to the economy decreased by 1.1 percent, and loans to households increased by 2.7 percent. The slowdown in domestic credit activity is interpreted as a consequence of the high base from the previous year, then the maturity of loans from guarantee schemes, as well as higher interest rates on loans due to the restrictive monetary policy of the NBS and the European Central Bank.

And the total domestic placements of banks in the non-monetary sector, which, in addition to claims based on loans, also include claims based on investments in securities, interest and fees, continued to slow down year-on-year growth, which amounted to 0.5 percent in June.

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At the same time, the decline in receivables based on uncategorized loans and loans for liquidity and working capital was largely neutralized by the growth of investment loans and import loans. Loans to large companies also recorded a decline, while borrowing by micro- and medium-sized companies increased. Observed by activities, the borrowing of companies from the processing industry and energy decreased, while lending to construction companies and companies from the field of real estate business increased the most.

The dinarization of total placements to the economy and the population decreased by 0.4 percentage points in the second quarter and amounted to 34.0 percent in June, while the degree of dinarization of placements to the economy decreased by 1.1 percentage points, to 17.0 percent, and placements to the population increased by 0.2 percentage points, to 53.0 percent.

As for the share of non-performing loans in total loans, in June it was kept close to the minimum of around three percent, which, according to the NBS assessment, indicates that the growth of loan repayment costs, which is a consequence of the rise in interest rates, as well as the termination of some measures which supported the private sector during the pandemic, did not affect the quality of bank assets.

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