Recent trends in corporate lending in Serbia indicate a notable shift towards liquidity-focused borrowing as companies adapt to a changing economic landscape. Data from the National Bank of Serbia reveals that while overall business lending continues to grow, reaching an increase of approximately 7-8% year-on-year, the underlying composition of this growth is becoming increasingly significant.
The primary drivers of new corporate borrowing are liquidity and working capital loans, which have outpaced traditional long-term financing options. Reports indicate that during the first two quarters of 2025, working-capital financing dominated new borrowing activities, surpassing export financing and other productive investment categories. This trend highlights the challenges faced by Serbian industries amidst rising operational costs related to energy, raw materials, wages, and logistics.
The divergence among sectors is also evident, with trade companies being the largest borrowers, followed by manufacturing, construction, and real estate sectors. These industries are central to Serbia’s domestic consumption cycle and infrastructure development, absorbing most of the available banking liquidity. Additionally, the energy sector has shown strong demand for financing as it undergoes significant transformation, particularly in renewable energy projects and infrastructure upgrades.
A noteworthy development in Serbia’s lending landscape is the increasing reliance on dinar-denominated loans. The National Bank of Serbia has promoted dinarization through regulatory incentives, resulting in a rise in dinar corporate lending while foreign exchange-indexed borrowing has slowed. This shift is crucial for enhancing financial stability as it mitigates exposure to exchange rate fluctuations tied to euro-denominated loans.
Despite improvements in borrowing costs—average interest rates on dinar loans dropping to around 6.5-6.7% and euro-denominated loans nearing 5%—financing remains more expensive than prior to 2022. This change impacts capital-intensive sectors such as renewable energy and heavy industry, which previously benefited from low interest rates.
The structure of corporate borrowing is also evolving, with micro, small, and medium-sized enterprises accounting for about 60% of total lending exposure. However, larger enterprises are increasingly driving incremental borrowing growth due to their stronger collateral positions and stable cash flows. This trend reflects banks’ preference for borrowers with visibility into their cash flows and strategic positioning in the market.
The stability of Serbia’s banking system remains a critical factor in the corporate lending environment. Non-performing loans have decreased to historic lows between 1.6-2.3%, while capital adequacy ratios are robust at over 21%, significantly above regulatory requirements. This stability enables banks to continue financing both corporate needs and infrastructure projects despite external economic pressures.
Looking ahead, the trajectory of corporate lending in Serbia will likely depend more on external European economic conditions than on domestic demand alone. As Serbian companies remain integrated into EU supply chains, any stabilization in European manufacturing could encourage a return to expansion-focused borrowing. Conversely, if European economic stagnation persists, companies may prioritize working capital and refinancing over aggressive expansion strategies.
In summary, Serbia’s current lending environment exhibits characteristics of both cautious resilience and potential for future growth, with implications for the broader economic model as businesses navigate volatility and inflationary pressures.
