The corona virus and the economic disasters it caused have completely different effects on the indebtedness of citizens and the economy.
The former pulled the brake on new loans and the latter unlocked it. This is shown by the new data of the National Bank of Serbia on the volume of loans for the first six months.
In the second quarter, which coincides with the time of the virus’s appearance, banks approved new loans worth 625 million euros to the population. Compared to the same period last year, it is half less, exactly by 52.6 percent, or 40.7 percent after excluding the effect of loans refinanced with the same bank. With the newly approved loans, cash loans accounted for 47 percent of all, and housing loans for 23 percent.
The mass of all loans approved to the population shows an increase in borrowing by 422.5 million euros, and the NBS notes that this is partly the result of a moratorium on loan repayment. In other words, the break in loan repayment increased the book weight of loans, because they were not repaid, so the amount of debt was not reduced.
The central bank states that this year, total lending is expanding with a double-digit growth rate. The first quarter, before the beginning of the crown, was excellent, the mentioned effects of the moratorium from April are also calculated, and loans from companies from the guarantee scheme also provide a positive contribution from May. Total domestic loans in June recorded a year-on-year growth of 13.9 percent, while the structure of loans remained favorable in terms of contributing to the growth of economic activity.
That the economic woes caused by the corona forced the economy to borrow can be seen from the data on growth in the second quarter. At that time, loans to the economy increased by 45.3 billion dinars, and their year-on-year growth accelerated from 14.5 percent in March to 15.9 percent in June.
Observed by purpose, investment loans are the dominant category of loans to the economy, with a share of 44.4 percent in June, and their amount increased by 377.5 million euros during the second quarter. They are followed by working capital loans, whose share in total loans to the economy in the growing need for liquid assets has been growing in recent months and amounted to 40.7 percent in June.
– The balance of loans has increased on the accounts of companies of all activities, and mostly with companies in the field of construction, real estate and transport. The volume of newly approved loans to the economy in the second quarter amounted to 1.8 billion euros, with more than 50 percent of this amount approved in June thanks to loans from the guarantee scheme. Compared to the same period last year, this amount is lower by 24.2 percent, or 21.1 percent if we exclude loans refinanced with the same bank. The largest part of new loans to the economy in the second quarter referred to working capital loans – 1.08 billion euros, while 70% of these loans were approved to the part of the market that consists of micro, small and medium enterprises. That part of the market also used 75% of new investment loans in the second quarter – according to the NBS.
The results of the central bank’s July survey on banks’ lending activity show that, in line with expectations set out in the April survey, they tightened the standards by which they approved loans to businesses and households during the second quarter, after the virus. The reason is the risk in the conditions of uncertainty caused by the Covid 19 pandemic, which was present in the responses of most banks.
On the other hand, competition in the sector and dinar sources of financing were recognized as factors that acted in the direction of easing the standards, which is largely the result of the reduction of the reference interest rate of the National Bank of Serbia. Banks estimate that the economy’s demand for loans increased in the second quarter, for working capital loans and restructuring of existing liabilities. At the same time, the demand of the population for loans decreased in the same period, which can be related to the measures taken for the health protection of the population, Srbija Danas reports.
