Serbia: Banking sector is profitable and well capitalised
Overview:
The Serbian banking sector has proved remarkably stable and profitable during the global financial crisis. A temporary run on bank deposits was averted in late 2008 with the increase of deposit insurance from EUR 3,000 to EUR 50,000. The banking sector is liquid, well capitalised and profitable. Although non-performing loans have inevitably risen as a result of the economic recession, returns on equity and assets have already started to recover despite increased provisioning for these bad loans. Sound regulation and supervision by the National Bank of Serbia has proved crucial in maintaining banking sector stability. With less external liquidity available, banks are relying on high deposit rates to sustain their lending. Thus, bank deposits denominated in Euros are attractive as (long-term) are some bank shares.