INTERVIEW - Societe Generale's Serbian Banking Unit Sees 2009 Net Profit Down on Rise in Provisions

“At the end of the third quarter of 2009, Societe Generale Banka Srbija AD posted 1.2 billion dinars in pre-tax profit and our projections are that the bank’s 2009 net profit will be more than 1.6 billion dinars,” executive board member Sonja Miladinovski told SeeNews in an e-mailed interview.

The bank posted 1.4 billion dinars in pre-tax profit through September of last year.

It targets a 2009 loan portfolio of 1.1 billion euro, while its deposits this year will be close to 500 million euro, Miladinovski said, adding that the bank plans to raise its lending and deposit portfolios by at least 20% next year. 

“Our projections for 2010 are quite optimistic. Serbia's economy will slowly emerge from the crisis, which can be seen from the projections of monetary authorities and global institutions for next year,” she added. Serbia's economy is expected to recover and grow by 1.5% in 2010 after shrinking by a projected 2.8% this year, according to the latest forecast of Serbia's central bank, NBS.

"The dinar key interest rate is seen by us as being in a very stable zone throughout 2010, more stable than the present downtrend, just bearing in mind the structure of the dinar reserves in the banking sector, coming either from foreign capital converted into local currency, which has to be guarded against inflation, or from dinar deposits that should be attracted in greater volumes from potential depositors by virtue of attractive interest rates," Miladinovski said.

“Therefore, the development of the secondary market of T-bills will be more interesting, provided that it further expands in 2010. We hope that its expansion will be supported by the combined effort of banks and various government departments, and that it will reflect the real market value of local dinar currency,” Miladinovski added. 

Serbia holds weekly auctions of three-month, six-month and twelve-month Treasury bills. It held its debut auction of twelve-month T-bills in August, aiming to bridge its yawning budget gap.

NBS kept its key repo rate unchanged at 10% earlier this month and said that 2010 inflation will meet its target of 6.0% with a variation band of two percentage points on either side. The central bank expects the country's consumer prices to rise by 7.5% this year compared to a 8.6% increase in 2008. The repo rate has come down from 17.75% over the course of the year so far.

Societe Generale Banka Srbija's deposits totalled 37 billion dinars at the end of September and loans totalled 55.5 billion dinars. 

“Together with cross border credits, we will end 2009 with more than 1.1 billion euro in total placements to private and legal entities in Serbia,” said Miladinovski.

The bank was the eighth largest lender with total assets of 88.4 billion dinars out of 34 banks active in the Balkan country at the end of September .

(1 euro=96.5119 Serbian dinars)