Serbia’s banking sector recorded a decline in overdue loan payments to 1.8% of outstanding credit at the end of October, compared with 2.0% a year earlier, according to the Association of Serbian Banks (UBS). The improvement came alongside a 14.9% annual increase in total bank lending, indicating that the expansion of credit balances has not been matched by an increase in the reported share of overdue obligations.
The latest figures show different arrears levels across borrower categories, with entrepreneurs recording the highest proportion, followed by companies and households. UBS applies different overdue-payment thresholds to individuals and business borrowers, limiting direct comparisons between the groups.
Arrears Differ Across Borrower Categories
The UBS report puts overdue payments at 1.1% of household loans, 2.3% of loans to legal entities and 3.3% of credit extended to entrepreneurs.
The calculation methodology differs by borrower type. For companies and entrepreneurs, arrears include amounts unpaid for more than 15 days, while the threshold for individual borrowers is more than 60 days. Consequently, the higher percentage recorded for entrepreneurs does not necessarily indicate weaker underlying creditworthiness compared with households.
The association’s arrears indicator must also be distinguished from the non-performing loan (NPL) ratio used in prudential banking statistics. These measures have different purposes and may rely on different classifications and accounting definitions, making them unsuitable for direct comparison.
Household and Corporate Credit Exposure
The scale of outstanding lending remains substantial. At the end of October, household bank debt amounted to RSD 2,211.71 billion, while loans to companies totalled RSD 2,524.39 billion.
With total credit expanding by 14.9% annually, portfolio performance depends not only on aggregate arrears but also on the distribution of lending across industries, individual borrowers and repayment maturities. Other relevant factors include the strength of loan collateral and household income levels, which influence borrowers’ ability to meet their financial obligations.
Banking Sector Exposure and Credit Risk Monitoring
The stability of repayment indicators will also need to be assessed against potential changes in energy costs and external demand, particularly if weaker international orders affect companies’ revenues.
Although the October figures show a lower reported arrears share, assessing the banking sector’s broader resilience requires examination of individual banks’ financial statements and supervisory indicators, alongside the aggregate UBS data.
