Page 110 - SE Outlook Regions 2023

Meanwhile, Montenegro’s parliament adopted a special law allowing the
government to put a cap on the prices of certain goods. The law sets
conditions for the temporary limiting of prices as part of Podgorica’s
efforts to slow down inflation.

The government is allowed to define the list of products on which price
caps will be applied. The list can be revised every three months. The
government will be allowed to either set a maximal price or define the
specific price of products.

When defining the prices, the government will take into account the
costs of manufacturing, as well as the retail sale prices, so that retailers
do not sell the products at a loss.

Despite the decreasing retail sales, German budget grocery retail giant
Lidl decided to open 20 stores in Montenegro and to employ around
1,000 people across the country. Lidl’s plan should be implemented in
2023 and 2024.

3.7.2 Banks

Montenegro’s banking sector remained stable through 2022 despite the
economic crisis caused by the Russian war in Ukraine.

Montenegrin commercial banks' assets increased 18.3% y/y to €6.15bn
at the end of October after rising 18.4% y/y the previous month,
according to data from the central bank (CBCG). Bank loans, which
accounted for 59.1% of total assets, increased 5.6% y/y in October after
moving up by 4.8% y/y in September, with total stock reaching €3.63bn.
The increase reflected a higher rise in lending to companies.

Corporate lending went up 13.7% y/y to €1.41bn, while household
loans grew 8.3% y/y to €1.57bn at end-October.

Commercial bank deposits increased by 23.2% y/y in October, after
rising 24.4% y/y the month before, reaching €5bn. Corporate deposits
increased 29.6% y/y, after rising by the same margin in September. The
total corporate deposit stock reached €2.2bn. Household deposits were
20.4% y/y higher y/y at €2.36bn, after rising by 20.8% y/y in September.

The average effective interest rate on new loans in Montenegro moved
up 0.59pp year on year in October to 5.59% after falling by 0.5pp y/y
the month before. Mortgage interest rates went up 0.5pp y/y to 5.33.
The average interest rate on consumer loans decreased by 3.66pp y/y
to 0.62%. Effective interest rates on business loans used to purchase
long-term assets moved up 1.81pp y/y to 5.4%.

The share of non-performing loans (NPLs) in Montenegro stood at
5.88% in September, down from 6.2% at the end of 2021 and remaining
unchanged from August. The stock of NPLs reached €215.5mn at
end-September, up 0.45% month on month and 9.55% higher year on
year.

110 SE Outlook 2023 www.intellinews.com