Serbia’s banking sector entered 2026 with strong capital buffers, high profitability and stable credit quality, according to the latest review by the National Bank of Serbia (NBS). The sector remains positioned to support additional lending to businesses despite slower economic growth.
At the end of the first quarter of 2026, the banking system’s capital adequacy ratio reached 19.5%, while non-performing loans (NPLs) accounted for only 2.1% of gross lending. The combination of strong capitalization and low levels of problematic loans indicates continued resilience across the banking system and provides a foundation for further expansion of corporate lending activity.
Profitability Remains Elevated Across Banking Sector
Banks recorded high profitability during the period, with annualised return on equity (ROE) reaching 18.1% and return on assets (ROA) standing at 2.5%. The sector also maintained a strong domestic funding position. Customer deposits were equal to 120.3% of non-interbank loans, providing banks with a stable source of financing and limiting dependence on wholesale funding markets. Liquidity conditions have declined from unusually high levels recorded earlier in the decade but remain comfortable. Liquid assets represented 35.3% of total assets, while the average monthly liquidity ratio stood at 2.3.
Foreign Currency Lending Remains Significant
Foreign-currency and foreign-currency-indexed loans continued to represent a major share of banking activity, accounting for 56.1% of total lending. This structure leaves borrowers exposed to movements in euro interest rates, although the Serbian dinar exchange rate remains under tight management.
The current banking-sector indicators support continued competition in lending segments including corporate finance, mortgage loans and cash lending.
Future Growth Depends on Lending Expansion
The latest figures suggest that the next phase of banking-sector growth will increasingly depend on expanding loan volumes, payment services and fee-based income rather than additional improvements from declining credit losses. With capital levels remaining above regulatory requirements and asset quality indicators staying strong, Serbian banks retain capacity to finance further business activity and investment.
