Trends in Bank Lending Activity During Q3 2025

The National Bank of Serbia (hereinafter: NBS) published its report on trends in bank lending activity for the third quarter of 2025 (hereinafter: the Report). As with other reports of this kind, the objective is to gain adequate insight into developments in lending activity, the cost of borrowing for corporates and households, as well as the existing conditions in the credit market that shape the supply of and demand for loans.

To provide a comprehensive overview, the Report uses the results of the NBS Bank Lending Survey, conducted since 2014. Thanks to this survey, there is a solid understanding of conditions in the credit market, based on insights into expected and realized changes both on the banks’ side and on the side of private sector demand.

Additionally, the Report incorporates results from a survey developed by the European Investment Bank and implemented within the framework of the Vienna Initiative 2. This survey, conducted twice per year since 2012, monitors the subsidiaries of international banking groups in Southeast European countries, with the aim of assessing the effects of supply and demand on lending activity, as well as the impact of domestic and international factors on lending conditions.

This text will primarily examine corporate lending and the cost of corporate borrowing, and then do the same for households.

Corporate Loans

Corporate loans recorded an accelerated year-on-year growth, rising from 7.1% in June to 9.0% in September. This growth was driven by favorable borrowing costs and eased credit standards. These loans account for almost half (48.7%) of banks’ claims on the non-monetary sector, with their share in GDP at 18.2%, an increase of 0.4 percentage points compared to the end of June. This increase is similar to that in the second quarter and is mostly attributable to borrowing by corporate enterprises.

Loan purposes were primarily working capital and liquidity financing, as well as investment. Borrowing under export loans and current accounts increased, while obligations under import loans and other categories decreased. The share of investment loans fell by 0.3 percentage points to 41.8%, though they recorded a year-on-year increase of 12.3% in September.

Regarding sectors, the largest borrowers were enterprises in manufacturing, trade, and transportation. Only companies in the energy sector and real estate activities reduced their indebtedness.

By enterprise size, nearly three-quarters of loans went to large enterprises, which led to a reduction in loans to micro, small, and medium-sized enterprises (MSMEs) by 1.1 percentage points, to 59.2%, while their year-on-year growth accelerated to 9.9%.

Loans were predominantly extended in foreign currency, which reduced the dinarization of corporate lending by 0.3 percentage points, to 21.7% in September. The share of euro-denominated loans increased by 0.2% (from 78% to 78.2%). Within FX-indexed loans, more than 80% are linked to EURIBOR, mostly to the three-month EURIBOR. For dinar loans, around 23% were tied to BELIBOR, mainly the three-month and one-month rates.

Non-performing loans (NPLs) in the corporate sector stood at 1.6%, 0.1 percentage points lower than in June. This decline indicates that economic support measures during the COVID-19 pandemic were appropriate, and that even after their expiration, the quality of banks’ assets was preserved. The increase in repayment costs on existing loans did not result in higher NPL formation. Moreover, the NPL ratio has been decreasing year-on-year, and since July 2015 it is lower by a total of 23.3 percentage points.

Cost of Corporate Borrowing

With interest rates declining—beginning at the end of 2023 as a result of anticipated monetary policy easing by the NBS and the European Central Bank (ECB)—average Q3 interest rates on dinar loans slightly increased, while interest rates on euro loans slightly decreased.

The weighted average interest rate on dinar loans increased by 0.1 percentage point to 6.6%, which led to an increase in interest rates on liquidity and working capital loans to 6.6%, up from 6.3% in Q2. On the other hand, interest rates on investment loans decreased by 0.2 percentage points to 7.1%. By enterprise size, interest rates decreased for large and micro-enterprises, while they increased for small and medium enterprises.

The weighted average interest rate on euro loans decreased by 0.2 percentage points to 4.7%. Interest rates on liquidity and working capital loans fell by 0.2 percentage points, while the interest rate on export loans dropped to 4.6%. By enterprise size, interest rates decreased for micro, small, and medium-sized enterprises, while they remained unchanged for large enterprises compared to Q2.

According to the NBS survey, banks eased credit standards in Q3 and further reduced interest margins, fees, and commissions for all types of enterprises, while loan maturities remained unchanged. Overall, demand for both dinar and FX corporate loans increased compared to Q2 2025, and banks expect a similar increase in Q4.

Household Loans

Supported by monetary policy easing and relaxed credit standards, as well as more favorable borrowing conditions for low-income borrowers and the approval of subsidized housing loans for young people, household loans accelerated their year-on-year growth in Q3, reaching 16.1% in September compared to 14.0% in June.

These loans increased by 88.8 billion dinars during Q3. The record growth in cash and housing loans was driven by a temporary NBS measure that allowed more favorable loan conditions for low-income individuals.

There was also an increase in consumer loans and credit card borrowing, while overdraft borrowing decreased. This resulted in an increase in the share of cash loans from 46.7% in June to 47.2% in September.

Household lending was supported by borrowing relief measures: a 5% interest rate cap on housing loans, extended until the end of the year, as well as amendments to the Law on the Protection of Financial Service Consumers, which set interest rate caps on cash and consumer loans, credit card debt, and overdrafts.

Regarding housing loans, support has been provided since 2020 through the permanent possibility of approving loans for the purchase of a first home with 90% loan-to-value (LTV). Since December 2024, a government housing loan program for young people has been in place, allowing a down payment of only 1% with a lower risk weight.

For other loan types, since December 2022, permanent restructuring of cash, consumer, and other non-purpose loans has been available. Since August 2025, consumer loans up to 150,000 dinars with maturities up to three years can be approved through a simplified procedure, with an effective interest rate of 0%.

New loan disbursements amounted to 286.7 billion dinars, 45.9% more than in Q3 2024.

Dinarization of household loans increased by 0.2 percentage points, reaching 56% in September. About 91% of dinar loans were approved at fixed interest rates, while variable-rate loans were mostly linked to the three-month BELIBOR. The share of euro loans decreased to 43.9%, with around 57% of FX-indexed loans tied to EURIBOR, primarily the six-month rate.

The share of NPLs in total household loans decreased by 0.2 percentage points during Q3, reaching a record low of 2.8% in September.

Cost of Household Borrowing

Due to monetary policy easing by both the NBS and the ECB, as well as NBS-specific measures, borrowing costs declined. By June 2024, the average interest rate on dinar loans had dropped by 2.9 percentage points, reaching 8.8% in September 2025.

Interest rate caps on loans to natural persons continue to apply under the Law on the Protection of Financial Service Consumers. These caps significantly reduced the costliest forms of borrowing – credit card debt and overdrafts from 27.9% in December 2024 to 17.5% in September 2025.

The weighted average interest rate on dinar household loans fell to 9.2%, down from 9.7% in the previous quarter. Interest rates decreased for cash, consumer, and other non-categorized loans, while interest rates on housing loans increased.

The weighted average interest rate on euro-indexed loans decreased to 4.6%, compared with 4.9% in the previous quarter. Interest rates on housing and other loans declined, while rates on consumer and cash loans remained almost unchanged.

According to the NBS Bank Lending Survey, banks continued easing credit standards for household loans. This easing is driven by competitive pressures, which are expected to persist in Q4. Demand for household loans undoubtedly increased during Q3, especially for dinar cash loans, refinancing loans, and consumer loans. Banks expect demand to continue rising in the coming period.