Serbia’s banking sector entered 2026 with one of the strongest credit-growth readings of the post-inflation cycle, as borrowing by households and companies continued to accelerate under still favourable financing conditions. The National Bank of Serbia’s first-quarter credit trends report shows that domestic lending has moved from recovery into expansion, with total loans to the non-monetary sector rising 16.9% year on year in March, after excluding exchange-rate effects.
The growth was broad enough to matter for the wider economy, but it was not evenly distributed. Household lending remained the main engine, increasing 20.9% year on year, while corporate loans rose 12.0%. Total domestic bank placements to the non-monetary sector, a wider measure that includes loans as well as securities, interest, fees and other claims, increased 17.5% year on year in March. That puts credit back at the centre of Serbia’s domestic demand story, supporting consumption, housing, liquidity management and parts of corporate investment.
The most important banking-sector signal is that faster lending has not yet come at the cost of weaker asset quality. The share of non-performing loans remained close to its historical low, at 2.09% in March. Coverage indicators also remained strong, with total loan impairment allowances equal to 109.2% of gross NPLs, while impairment allowances for NPLs covered 60.3% of gross problematic loans. The capital adequacy ratio stood at 19.5% at the end of the first quarter, well above the regulatory minimum of 8.0%. In simple terms, Serbia’s banks are expanding credit from a position of capital strength rather than balance-sheet stress.
The funding structure remains conservative. Banks continued to rely mainly on deposits to finance lending, and the loan-to-deposit ratio stayed below 100%, at around 82% in March. This ratio has been gradually increasing since 2025, reflecting stronger credit growth, but it still points to a banking system funded primarily by domestic deposits rather than wholesale external leverage. For financial stability, that matters: Serbia’s credit cycle is accelerating, but it is not being driven by an overheated loan-to-deposit structure.
Corporate lending rose by RSD 27.0 billion in the first quarter, excluding exchange-rate effects, or 1.4% compared with the end of 2025. The stock of corporate loans reached RSD 1,910.2 billion in March, equivalent to 47.4% of total bank credit claims on the non-monetary sector. Corporate loans also edged higher as a share of GDP, reaching 18.2%, compared with 18.1% at the end of last year.
The composition of corporate borrowing is telling. Companies mainly borrowed for liquidity and working capital, with this category increasing by RSD 24.6 billion during the quarter. Liquidity and working-capital loans accounted for 47.9%of total corporate loans in March, up 0.6 percentage points from the end of 2025, while their annual growth accelerated to 13.5%. Investment loans remained large, but their share slipped by 0.7 percentage points to 42.7%, with annual growth slowing to 12.5%.
That shift carries a clear macroeconomic message. Serbian companies are still borrowing, but the strongest demand is for operating liquidity, inventories, receivables, current obligations and working-capital buffers rather than a pure investment-led credit cycle. Transport, construction and trade companies increased borrowing the most during the quarter, while only manufacturing and agriculture recorded declines. The pattern fits an economy where logistics, infrastructure, retail and construction activity are still generating financing needs, while some production sectors remain more cautious.
The SME segment remains structurally important. Loans to micro, small and medium-sized enterprises accounted for 60.6% of total corporate loans in March, unchanged from the end of 2025, while their annual growth accelerated to 11.6%. This confirms that Serbia’s credit expansion is not limited to large corporates. SMEs remain the core borrower base for banks, especially in trade, services, construction, transport and local production chains.
New corporate lending was slightly softer in flow terms. Newly approved corporate loans amounted to RSD 289.1 billionin the first quarter, down 1.1% compared with the same period of 2025. Liquidity and working-capital loans remained dominant, representing about two thirds of new corporate lending. Investment loans accounted for around one fifth. This supports the view that credit stock is growing strongly, but fresh corporate demand is still weighted toward short- and medium-term operating finance rather than aggressive capital expenditure.
Interest rates for companies edged higher but remained relatively favourable. The average rate on dinar corporate loans increased to 6.8%, from 6.5% in the previous quarter, while the rate on euro-indexed corporate loans rose to 4.9%, from 4.8%. The increase is modest, but it matters because corporate borrowing costs are no longer falling automatically. Banks remain willing to lend, but pricing is beginning to reflect risk, funding costs, borrower quality and sector exposure more carefully.
Household lending was the stronger part of the credit cycle. Loans to households increased by RSD 72.3 billion in the first quarter, excluding exchange-rate effects, or 3.7% from the end of 2025. The stock of household loans reached RSD 2,006.9 billion in March, making up 49.8% of total bank credit claims on the non-monetary sector. Household loans also increased as a share of GDP, reaching 19.1%.
Cash loans and housing loans carried the increase. Cash loans rose by RSD 40.0 billion, while housing loans increased by RSD 25.9 billion. Cash loans remained the largest household credit category, accounting for 47.7% of total household loans, up 0.3 percentage points during the quarter. Housing loans accounted for 38.1%, slightly lower by 0.1 percentage points. Annual growth was strong in both categories, reaching 24.0% for cash loans and 20.2% for housing loans.
The housing-loan reading is particularly relevant because it is being supported not only by lower borrowing costs compared with the peak-rate period, but also by programmes aimed at younger borrowers and first-home buyers. This has helped bring demand back into the mortgage market and supports residential real estate activity. At the same time, the rapid increase in household lending raises a medium-term question for banks and regulators: credit growth is healthy while wages, employment and asset quality remain strong, but the pace of household borrowing will need careful monitoring if income growth slows or rates stay higher for longer.
Interest rates for households remained broadly stable. The average rate on dinar household loans stood at 8.3%, unchanged from the previous quarter, while the rate on euro-indexed loans increased slightly to 4.7%. Favourable borrowing terms for lower-income citizens and for first residential property purchases helped support demand. These measures reduced the effective cost of financing for selected borrower groups and contributed to the high realisation of household loans.
Dinarisation reached a new high. The share of dinar-denominated placements to companies and households increased to 39.7% in March, up from 39.3% in December 2025. Household loan dinarisation rose to 56.5%, while corporate loan dinarisation slipped slightly to 22.8%. This divergence is important. Household lending is increasingly dinar-based, helped by the structure of cash loans and local-currency products, while companies remain more exposed to euro-indexed borrowing because of trade links, imported inputs, investment financing and foreign-currency revenue structures.
From a monetary-policy perspective, the report shows the delayed effect of previous easing by the National Bank of Serbia and the European Central Bank. Borrowing conditions remained supportive in the first quarter, and banks also reported softer credit standards for households. The easing effect is most visible in the acceleration of household lending, but corporate demand has also benefited, especially in liquidity and working-capital finance.
The economic implications are mixed but broadly constructive. Stronger lending supports consumption, housing, business liquidity and short-term growth. It also helps SMEs and households refinance or expand under less restrictive conditions than in the previous high-rate phase. But the composition of growth matters. A credit cycle dominated by cash loans and working-capital finance is different from one driven mainly by productive investment. It can support demand quickly, but it does not automatically translate into higher long-term productivity unless corporate investment lending also gains momentum.
For banks, the first quarter confirms an attractive operating environment: credit demand is growing, deposit funding remains solid, capital buffers are high and NPLs are low. For companies, the data show that liquidity management remains a priority, with transport, construction and trade leading new borrowing needs. For households, the report points to stronger confidence, easier access to credit and renewed mortgage activity.
Serbia’s credit market is therefore expanding from a stable banking base, but the next phase will depend on the quality of loan growth. The strongest scenario would combine continued household resilience with a stronger recovery in corporate investment lending, especially in manufacturing, energy, infrastructure, technology and export-oriented sectors. The first-quarter data show that the banking sector has capacity to finance growth; the deeper question is whether credit will increasingly move from consumption and liquidity support toward investment that strengthens Serbia’s productive base.
