Credit growth in Serbia is becoming more broadly based, but its composition reveals two different lending cycles. Household borrowing is expanding rapidly through cash and housing loans, while corporate credit remains concentrated in working capital and investment financing, much of it linked to the euro and Euribor.
Corporate loans increased by RSD27bn in the first quarter of 2026, after excluding exchange-rate effects, bringing the stock to approximately 18.2 per cent of GDP. Annual growth was supported by a 13.5 per cent increase in working-capital and liquidity loans and a 12.5 per cent rise in investment lending.
Working-capital facilities represented 47.9 per cent of corporate credit, while investment loans accounted for 42.7 per cent. This is a relatively balanced structure compared with banking systems in which short-term liquidity lending dominates, although the distinction does not establish how much investment financing supports new productive capacity rather than the replacement of existing equipment.
New corporate lending amounted to RSD289.1bn during the quarter, down 1.1 per cent from a year earlier. About two-thirds consisted of working-capital loans, while investment loans represented 21 per cent. Micro, small and medium-sized companies received 74 per cent of new investment loans and accounted for 60.6 per cent of the outstanding corporate portfolio.
The maturity structure is comparatively favourable, with 83.5 per cent of corporate loans carrying an original maturity longer than one year. Sectoral demand was uneven: borrowing increased in transport, construction and trade, while manufacturing and agriculture reduced their loan exposure during the quarter.
The most significant structural risk is currency denomination. Only 22.8 per cent of corporate lending was dinarised, leaving more than three-quarters denominated in or indexed to foreign currency, predominantly the euro. About 81 per cent of foreign-currency and foreign-currency-indexed corporate loans were linked to Euribor, principally the three-month rate.
This structure benefited borrowers as the European Central Bank’s easing cycle reduced money-market rates. It nevertheless leaves company cash flows exposed to euro interest rates and, where revenue is earned primarily in dinars, to currency mismatches. Serbia’s managed exchange-rate stability has limited realised losses, but it does not remove the underlying exposure.
New dinar corporate loans carried an average interest rate of approximately 6.8 per cent during the first quarter. Working-capital dinar loans averaged 6.5 per cent and investment loans 8.5 per cent. Euro and euro-indexed corporate loans averaged 4.9 per cent, including 4.8 per cent for working capital and 5.2 per cent for investment.
Pricing also varied sharply by borrower size. Average euro borrowing costs were approximately 4.6 per cent for large companies, 4.8 per cent for medium-sized companies, 5.1 per cent for small businesses and 6.2 per cent for microenterprises. The gap demonstrates how credit risk, collateral quality and negotiating power influence the transmission of monetary easing.
Credit quality remains strong. The corporate non-performing loan ratio was 1.4 per cent, including 1.6 per cent for companies. Real-estate businesses recorded an NPL ratio of only 0.2 per cent, while manufacturing was higher at 2.8 per cent, still low by historical standards.
Household lending expanded more quickly. The stock reached RSD2.01tn at the end of March, equal to 19.1 per cent of GDP and almost half of banks’ claims on the domestic non-monetary sector. Household loans increased by RSD72.3bn during the quarter, led by RSD40bn of cash lending and RSD25.9bn of housing loans.
Cash loans accounted for 47.7 per cent of household credit and housing loans for 38.1 per cent. Their outstanding stocks grew by 24 per cent and 20.2 per cent year on year, respectively. The state-supported housing programme for young borrowers generated slightly less than half of the quarterly increase in mortgages.
Unlike companies, households primarily borrow in dinars. Household loan dinarisation reached 56.5 per cent in March and approximately 56.8 per cent by May, while 76.8 per cent of newly approved household loans were denominated in dinars. The structure reduces direct currency risk, although housing loans remain predominantly euro-indexed and sensitive to Euribor.
The banking system is therefore financing both investment and consumption without a visible deterioration in asset quality. Yet the pace and allocation of lending matter. Corporate investment credit can expand productive capacity, while rapid cash lending is more likely to stimulate imports and household consumption. Subsidised housing loans can improve access to property but may also raise prices when housing supply is constrained.
External borrowing presents an additional contrast. Serbia recorded net repayments of €813mn on financial loans in January-May. Companies repaid a net €1.3bn to foreign creditors, while banks borrowed a net €311mn and the government €198mn. Domestic banks are consequently replacing part of the corporate sector’s direct external financing.
This increases the importance of local bank balance sheets to investment and liquidity conditions. With low non-performing loans, strong deposit funding and falling benchmark rates, banks have room to expand. The next test is whether that capacity is channelled towards export-oriented investment and productivity or increasingly towards consumption, property and short-term corporate liquidity.
