In 2023, Serbia’s banking sector posted a record profit of 1.5 billion euros, marking a significant increase in profitability compared to previous years, driven primarily by higher interest margins. Banks benefited from a faster rise in loan interest rates compared to deposit rates. The return on assets was 2.8%, and the return on capital reached 20.3%, both record levels since the sector’s reforms in the early 2000s.
This surge in profits occurred amidst high inflation and interest rates globally. In Serbia, inflationary pressures emerged in late 2024 and early 2025, while the National Bank maintained high liquidity levels, withdrawing billions through repo transactions. Bank deposits grew noticeably from early 2023, leading to substantial liquidity, and credit growth began to pick up in mid-2024, primarily driven by household loans.
Banks experienced a significant increase in interest income, which rose by 16% year-on-year, reaching 3.1 billion euros, largely due to higher interest margins. Operating income for the sector grew by 20%, totaling 2.9 billion euros, while operating costs increased by just 11%. Banks also saw a substantial rise in fee income, which more than doubled since 2019, with banks focusing on digitization and cost-cutting measures.
Despite the strong performance, experts caution that maintaining such high profitability could be challenging, particularly as non-performing loans (NPLs) might rise slightly in the coming months. The operating profits of major banks, including Raiffeisen, Inteza, and Unikredit, all showed significant growth.
The five largest banks accounted for 62% of the total assets in the sector, but this distribution changed at the start of 2024 with the completion of the merger between AIK and Eurobank Direktna banka, making AIK Bank the third-largest bank by assets.
