Credit activity of banks in the second quarter of 2021

According to the report data of the National Bank of Serbia, trends in credit activity for the second quarter of 2021, the conclusion is that the year-on-year growth of credit activities continued in June, with total domestic loans in the non-monetary sector were higher than a year ago by 6.3%. Borrowing conditions on the domestic market remained favorable in the second quarter of 2021.

Lending to businesses

Year-on-year growth of loans in the economy amounted to 2.9% in June and slowed down compared to the previous quarter (4.9% in March 2021). In the second quarter, the economy loans increased by 20 billion dinars or by 1.4%. The growth of loans in the economy was entirely driven by dinar lending, which was facilitated by favorable lending conditions under guarantee schemes and the easing of the monetary policy of the National Bank of Serbia.

During the second quarter the company mostly took out loans for working capital and liquidity purposes, which increased by 22.2 billion dinars, and borrowing based on investment loans (1.0 billion dinars) also increased.

If we look at the activities, during the second quarter, the indebtedness of companies in the field of transport, accommodation and communication, trade and real estate business increased the most.

Observed by the size of companies, almost the entire growth of loans in the second quarter refers to lending to small enterprises.

The share of non-performing loans in total economy loans in June was 2.9%, which is 0.2 percentage points lower than in March 2020. In relation to July 2015, ie. immediately before the start of the implementation of the Strategy *, the share of non-performing loans in total credit economies is lower by 22.1 percentage points.

The average weighted interest rate on newly approved dinar loans to the economy during the second quarter was 3.2%, which is 0.4 percentage points more than in the first quarter, while the weighted average interest rate on newly approved loans in euros and euro-indexed loans was almost unchanged compared to the first quarter and amounted to 2.5%.

Lending to households

Year-on-year growth in retail loans was gradually slowed during the second quarter, reaching 10.6% in June (compared to 11.5% in March).

Retail loans increased by 44.8 billion dinars, or 3.6%, the growth was driven by housing loans, which accounted for almost half of household growth in the second quarter, and whose year-on-year growth accelerated to 15.7% in June. Housing loans are followed by cash loans and liquidity and working capital loans granted to entrepreneurs. Other uncategorized loans decreased by 1.3 billion dinars.

The measures adopted by the National Bank of Serbia in previous years contributed to the good realization of loans to households, so the volume of newly approved retail loans in the second quarter amounted to 151.7 billion dinars, which is twice as much as in the second quarter of 2020.

The share of non-performing loans in the total loan population in June was 4.0%, which is lower than in March (4.1%) and higher than at the end of 2020 (3.6%). Compared to the period before the adoption of the Strategy for resolving problem loans, the share is lower by 7.2 percentage points.

The average weighted interest rate on newly approved dinar loans to households remained unchanged compared to the first quarter and amounted to 8.7%, while the average weighted interest rate on newly approved Euro-indexed loans to households decreased by 0.1 percentage points and amounted to 3.1%, which is also its new lowest value.

Credit standards during the second quarter of 2021 were eased for dinar loans in the economy, while they were slightly stricter for foreign currency indexed loans. Banks have similar expectations for the third quarter, where, according to banks, favorable prospects in terms of economic activities will work in the direction of easing standards. In the second quarter, the companies’ demand for loans also grew, and further growth is expected in the third quarter as well.

* Non-Performing Loan Resolution Strategy (Official Gazette of the Republic of Serbia, No. 72 of 19 August 2015)