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According to the NBS, banks have significant capital reserves, which
allows them to successfully deal with credit risk, even in the case of the
presumed most pessimistic scenario, in stress tests.

The ratio of loans and deposits of clients, which amounted to 85.4% at
the end of October 2021, speaks of a stable structure of financing and
liquidity of the banking sector in general, the central bank said.

At the end of October 2021, the share of non-performing loans (NPLs)
in total loans was 3.5%.

At the end of October 2021, there were 24 commercial banks operating
in Serbia. Net assets of the banking sector amounted to €42,054mn
and capital to €6,151mn. Gross bank loans amounted to €25,367mn, of
which gross NPLs were €883mn.

According to the NBS, deposits amounted to €31,055mn, and profit
before tax €406.2mn. The return on assets (ROA) of the banking sector
is 1.2%, the return on equity (ROE) 8.0% and the net interest margin
2.7%.

3.10.3 Industry

The main ongoing story in Serbia’s industrial sector is the Jadar lithium
mine project pursued by international mining company Rio Tinto. The
project is intended to meet growing international demand for lithium, an
important input for batteries for electric vehicles (EVs), as well as
smartphones and other electronic products. However, following a series
of mass protests and road blockades in autumn 2021 that have
continued into January 2022, the government appears to have backed
away from the project, at least for now.

Rio Tinto said in January it is pushing back the expected date of the
first saleable production. “At the Jadar lithium-borate project in Serbia,
as a result of delays in the approval of the Exploitation Field Licence
(EFL), which is a prerequisite to publish the Environmental Impact
Assessment (EIA) and commence the consultation process, we are
revising development timelines. Based on current estimates and subject
to receiving all relevant approvals, permits and licences, first saleable
production is expected to be no earlier than 2027 (previously 2026),”
said the statement published on Rio Tinto’s website.

Given this is a highly political sensitive topic, more clarity is expected on
the Serbian government’s position after the general and presidential
elections in April.

Among the major industrial companies in Serbia, Chinese companies
Zijin Copper and HBIS were the largest exporters from the Western
Balkan country in the first eight months of 2021, according to Ministry of
Finance data. As the international economy recovered, HBIS Group
Serbia Iron & Steel restarted one of its two blast furnaces in August

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