February 19 (SeeNews) - The ratio of non-performing loans (NPLs) in Serbia's banking sector fell to 4.1% at the end of December from 4.7% in September, central bank governor Jorgovanka Tabakovic said on Wednesday.
The reduction of the NPL share in total loans to the new lowest level of 4.1% creates room for further credit growth, Tabakovic said in her remarks at the presentation of the National Bank of Serbia's February inflation report.
"The loan structure is such that lending activity also gives a full contribution to economic growth, owing principally to stepped-up investment borrowing by enterprises. Since mid-2019, investment loans constituted the bulk of corporate loans," Tabakovic said, adding that the loan structure in terms of company size is also favourable, with a major portion being channelled to micro-, small- and medium-sized enterprises.
Furthermore, thanks to the effects of past monetary policy easing, a reduced country risk premium, low interest rates in the international money market and higher interbank competition, interest rates on dinar loans declined in late 2019 to their lowest levels so far of 4.0% for the corporate sector and 9.1% for households, Tabakovic noted.
The financing terms of euro-indexed loans have also improved, she said without elaborating.
The central bank started to regularly monitor NPLs in 2008. After a temporary decrease in the second half of 2012, NPLs rose again in 2013 and continued to grow in 2014 and the first quarter of 2015. At the end of April 2015, NPLs in the Serbian banking sector reached 442.6 billion dinars ($4.1 billion/3.8 billion euro), or 23% of total loans.
(1 euro = 117.520 dinars)