Serbia’s banks entered the second half of 2026 with non-performing loans at 2.0%, a 20.0% capital adequacy ratio and 17.9% return on equity, while the composition of lending continued to shift toward households and construction. According to National Bank of Serbia data for the second quarter, the NPL ratio fell from 2.1% at the end of 2025 to 2.0% at the end of June. Households and non-profit institutions accounted for 43.9% of total bank credit, compared with 41.3% for companies. Construction increased its share to 4.9%, from 4.5% at the end of 2025.
Household credit takes a larger share
Household lending has become the largest category of bank credit, supported by consumer loans, cash loans and mortgages. The shift increases banks’ exposure to household income, interest rates and consumer demand, while corporate lending remains important for manufacturing, exports, energy and infrastructure. The changing credit mix also places greater emphasis on how new lending is distributed between consumption, housing and productive investment.
Construction lending continues to expand
Construction accounted for 4.9% of total loans at the end of June, reflecting financing demand linked to infrastructure, residential and commercial development. Public infrastructure programmes, Expo-related construction, logistics development and residential activity are generating financing needs across the construction supply chain. The risk profile varies between projects, with developments supported by presales, government contracts or long-term infrastructure funding differing from more speculative real-estate projects.
Banks retain strong capital and liquidity
The 2.0% NPL ratio reflects years of balance-sheet cleanup, stronger underwriting and improved collateral and risk-management practices. A 20.0% capital adequacy ratio provides substantial capacity to absorb losses, while 17.9% return on equity shows that banks continue to generate strong earnings.
At the same time, narrower liquid assets declined to 26.9% of total assets, from 29.9% at the end of 2025. The deposits-to-loans ratio fell to 118.1%, from 122.4%. These levels do not indicate an immediate liquidity problem, but they show that banks are gradually deploying more of their liquidity into loans and other earning assets.
Lending mix becomes more important for profitability
Serbian banks have benefited from high interest rates, strong liquidity, low credit losses and resilient loan demand. As monetary conditions change, banks may seek additional growth through mortgages, consumer credit, SME financing, construction and specialised corporate lending. At the same time, competition could pressure lending margins as depositors seek higher returns. With NPLs at 2.0%, strong capital and high profitability, the banking sector has moved beyond the earlier focus on repairing legacy problem loans. The changing distribution of credit toward households and construction, together with the gradual use of liquidity buffers, is now shaping the sector’s balance-sheet development.
