Serbia’s gross non-performing loans reached €792 million, up from €774 million at the end of 2025, according to a September presentation by the National Bank of Serbia (NBS). The increase in the outstanding balance contrasts with the declining bad-loan ratio, highlighting the difference between the proportion of troubled credit and the amount of debt that remains unpaid.
Outstanding Problem Loans Increase
The non-performing loan ratio measures problem loans as a share of a bank’s total loan portfolio. When lending grows faster than the stock of troubled loans, this ratio can fall even if the outstanding amount of non-performing credit increases. The latest figures show that Serbia’s gross non-performing loans rose by €18 million between the end of 2025 and July 2026. Although the increase was modest, the absolute balance remains relevant when assessing banks’ exposure to loans requiring collection or recovery.
A change in the outstanding stock does not, by itself, demonstrate weaker lending standards or deteriorating underwriting. The balance reflects several factors, including new defaults, repayments, recoveries, write-offs and sales of loan portfolios. The net change alone does not reveal how much each process contributed to the movement.
Loan Quality and Recovery Requirements
The non-performing loan ratio therefore provides only part of the picture of credit performance. A lower ratio can indicate that troubled loans account for a smaller proportion of the overall portfolio, while banks may still have a larger volume of outstanding problem debt to recover.
For investors, assessing the pace at which recently granted loans develop repayment difficulties is one of the relevant considerations. The adequacy of provisions against potential losses is also important when evaluating banks’ exposure to non-performing credit.
Rapid loan portfolio growth can affect the timing of asset-quality assessments because newly issued loans have had less time to mature and potentially encounter repayment problems. Consequently, the declining ratio and the increase in the outstanding balance need to be considered together when examining Serbia’s banking-sector credit performance.
