The National Bank of Serbia (NBS) has published the report Trends in Banks’ Credit Activities for the fourth quarter of 2024, which provides a detailed analysis of developments in the domestic credit market. The report examines borrowing costs for individuals and legal entities, as well as a comprehensive analysis of all factors influencing the supply and demand of loans in Serbia’s financial market.

In this report, the NBS uses data collected via a survey from 2014, on the credit activity of commercial banks operating in Serbia’s financial market, as well as data from the European Investment Bank, which has been gathered semiannually since 2012.

Corporate Loans

During Q4, corporate loans slightly slowed their month-on-month growth to 4.8% in December (compared to 5.0% in September). In normal terms, corporate loans accounted for nearly half of total loan receivables, amounting to RSD 1,687.3 billion, while, in the same period of 2023, their share in GDP decreased to 17.6% down from 18.3%.

Corporate loans have increased for RSD 6.2 billion, driven by the growth of loans to privet companies, while public enterprises reduce their borrowing. A notable trend is the growing share of dinar-denominated loans (which rose by RSD 60.9 billion) and accounted for more than half of the corporate loan growth in Q4, meanwhile foreign currency-indexed loans have increased by RSD 16.8% billion.

The rise of dinar-denominated corporate loans was driven by the Executive Board of the NBS’s Decision on Bank Capital Adequacy, which mandates a capital deduction for banks if the share of foreign currency-indexed and foreign currency loans in total loans to the non-financial and non-government sectors exceeds the 71% threshold for 2025.

Regarding loan purpose, investment lending (RSD 40.1 billion) contributed to corporate loan growth, increasing it’s share in total corporate loans by 2.2 percentage points to 42.8% in December, with its month-on-month growth accelerating to 7.1%. Meanwhile, as investment lending expanded, the share of liquidity and working capital loans decreased by 0.8 percentage points to 47.1%, with their month-on-month growth slowing to 5.5%.

Analyzing bank’s credit activity by industry, borrowing increased in the real estate and construction sectors, while the manufacturing sector saw a moderate rise in debt. In contrast, all other industries experienced a decline in borrowing. In terms of long-term loans, their share in total corporate loans increased by 1.6 percentage points, from 82.9% in September to 83.5% in December.

Looking at loan growth by company size, increased borrowing by micro, small, and medium-sized enterprises led to a 2.1 percentage point rise in their share of total corporate loans, from 58.7% in September to 60.8% in December, with their month-on-month growth accelerating to 7.7%. At the same time, large enterprises saw a noticeable decline in loan obligations.

The volume of newly approved corporate loans in Q4 amounted to RSD 432.2 billion, marking a 25.4% increase compared to the same period in 2023. Despite the rise in new loans, liquidity and working capital loans remained the dominant category, accounting for 56% of newly approved corporate loans, primarily taken by micro, small, and medium sized enterprises. Investment loans made up 35% of new corporate loans, with more than 60% of borrowers in this category also being micro, small, and medium-sized enterprises.

The increase in the share of dinar loans relative to foreign currency-indexed placements raised the level of loan dinarization for businesses by 0.9 percentage points (p.p.) during Q4, reaching 20.9% in December. A noticeable decrease of 0.8 p.p. was observed in the share of euro-indexed loans and loans in euros, bringing it down to 79.1% in December. Regarding the structure of foreign currency-indexed and foreign currency loans, which are tied to EURIBOR—mostly the three-month EURIBOR—around 79% of loans were affected. In terms of dinar loans for businesses, 23% were linked to BELIBOR, primarily the one-month BELIBOR.

The share of non-performing loans (NPL) in total business loans stood at 1.8% in December, unchanged from September but showing a decrease of 0.3 p.p. compared to the same period in 2023. Observing corporate loans separately, similar data can be noted, with NPLs accounting for 2.0% of total loans in December, remaining unchanged from September but decreasing by 0.4 p.p. compared to the end of 2023.

The NPL structure by sector ranges from 0.4% in the real estate sector to 4.0% in agriculture. Additionally, a new record low NPL level was observed in the construction sector (1.3% in November) and real estate operations. The implementation of the Strategy for Resolving Problematic Loans, adopted in August 2015, has reduced the share of NPLs in total business loans by 23.2 p.p., with the most significant improvements seen in the construction, real estate, and trade sectors.

Interest Rates

Following the monetary policy easing in June 2024, the NBSF initiated a decline in interest rates for dinar and euro-indexed loans in the corporate sector. The NBS reduced the key policy rate by 0.25 p.p., with further reductions in July and September. These measures lowered the average weighted interest rate on newly approved dinar loans in Q4 by 0.6 p.p. to 7.2%. The NBS measures contributed to the most significant decline in interest rates on investment loans, from 8.8% in Q3 to 7.0% in Q4. A notable decrease was also observed in uncategorized loans, from 8.1% to 7.4%, while the decline in working capital loan interest rates was marginal at 7.3%. Analyzing interest rates by company size, the average interest rate ranged from 6.8% for large enterprises to 8.7% for micro-enterprises.

During Q4, interest rates on loans for all purposes decreased, starting with the reduction of the average weighted interest rate on newly approved corporate loans by 0.6 p.p. This downward trend was reflected in liquidity loans (from 6.3% to 5.7%), investment loans (from 6.6% to 6.2%), import loans (from 6.3% to 5.6%), and other uncategorized loans (from 7.2% to 6.1%). These Q4 data indicate increased demand for dinar and long-term foreign currency-indexed loans, alongside a decline in demand for short-term foreign currency loans.

According to an NBS survey conducted in January 2025, banks have eased credit standards for businesses. This relaxation followed lower financing costs for dinar loans and a streamlined loan agreement process.

Household Loans

Household loans accelerated their monthly growth during Q4, increasing from 7.8% in September to 10.4% in December. This was driven by the easing of credit standards and higher demand for loans due to more favorable borrowing conditions. The total household loan portfolio amounted to RSD 1,616.4 billion in December. This market behavior increased the share of household loans in GDP by 0.2 p.p., bringing it to 16.8% in December. Household loans grew by RSD 34.2 billion, primarily due to the expansion of cash loans (RSD 21.3 billion) and housing loans (RSD 12.0 billion), while consumer loans increased by RSD 1.4 billion. Meanwhile, debt from overdrafts and other uncategorized loans declined. Cash loans recorded the highest growth, accounting for more than three-fifths of total loans. They were followed by liquidity and working capital loans for entrepreneurs (which increased by RSD 6.6 billion) and investment loans, which grew by RSD 0.4 billion.

Regarding housing loans, which make up 38.4% of total household loans, the NBS, through the Decision on Temporary Measures for Banks Relating to Housing Loans to Individuals, temporarily capped interest rates on new housing loans for first-time homebuyers. It also allowed early repayment under more favorable terms and reduced the required borrower contribution from 20% to 10%.

The scope of newly approved household loans in Q4 reached RSD 237.2 billion, representing a 63.7% increase compared to the same period in 2023. This growth was primarily driven by cash loans, which accounted for two-thirds of new loans, followed by housing loans, which made up 18% of total volume.

In terms of loan currency, most loans were issued in dinars (55.4%), followed by euro-denominated loans (44.5%) and loans in Swiss francs (0.1%). As for the structure of foreign currency and foreign currency-indexed loans, 68% were tied to EURIBOR—mostly the six-month EURIBOR—while 84% of dinar loans were contracted at fixed interest rates, typically linked to the three-month BELIBOR.

During Q4, a new lowest level of NPLs was recorded at 3.4%, down by 0.3 p.p. compared to September and by 0.9 p.p. compared to the end of 2023.

Household Loan Interest Rates

A drop in the average interest rate on newly approved dinar loans was recorded for the first time in two and a half years, reaching 9.9%. Quarter-on-quarter, it fell by 1.0 p.p. from Q3 and now stands at 10.3%. All other interest rates followed this downward trend as well: cash loan rates dropped by 1.0 p.p. (to 10.7%), and uncategorized loans decreased by 0.9 p.p. (to 8.4%), with the exception of consumer loans, which remained nearly unchanged. The largest decline was observed in housing loan rates, which dropped by 3.7 p.p.

For newly approved euro-indexed household loans, the average weighted interest rate fell in Q4 by 0.3 p.p., down to 5.8%. At the same time, rates on cash loans (2.6%) and other uncategorized loans (9.1%) were reduced by 0.6 p.p., accompanied by a 0.6 p.p. drop in housing loan rates, now at 5.0%.

Regional Comparison

According to NBS estimates based on Eurostat and central bank website data, credit activity across the region has accelerated. Nominal credit growth ranged from 6.8% to 16.7%, mostly driven by household lending. In Serbia, loans account for 35.3% of GDP, placing the country in the mid-range compared to others in the region. Loan-to-GDP ratios across regional countries ranged from 25% (Romania) to 51% (Bulgaria and North Macedonia). The loan-to-GDP ratio in Serbia and Romania remained unchanged compared to the end of 2023.

Serbia received favorable assessments in a survey of foreign banks regarding the potential, positioning, and profitability of its financial market.