Page 129 - SE Outlook Regions 2023

Fitch Ratings said in August that Serbia preserved its sound banking
sector fundamentals. “The banking sector weathered the pandemic well
and has limited direct exposure to Russian banks,” the rating agency
said.

“The common equity Tier 1 ratio was a still high 18.9% at end-May
2022, liquidity has remained adequate, and return on equity, at 10.8%,
has recovered to pre-pandemic levels. 84% of the sector (by assets) is
foreign-owned, reducing contingent liability risk, but the share of
FC-denominated deposits at 64% is well above the 'BB' median of
18%.”

The EBRD announced a series of loans for Serbian banks in 2022. In
November, the bank said it is considering providing two loans to
Raiffeisen Leasing Serbia of up to €60mn in total for on-lending to
micro, small and medium-sized enterprises (MSMEs). With final
approval expected on January 11, 2023. The EBRD is also providing a
loan of up €5mn to Serbia’s Banca Intesa Beograd (BIB).

Earlier in 2022, the EBRD approved a long-term senior unsecured loan
of up to €15mn to Serbia’s NLB Komercijalna banka for on-lending to
small and medium-sized enterprises (SMEs); a €40mn loan to Addiko
Bank Serbia for on-lending to small and medium enterprises (SMEs);
new financing to Erste Bank in Serbia to support SMEs, alongside
country donors; and, a senior multicurrency unsecured loan of up to
€10mn to Serbia’s 3 Banka (3B) for on-lending to the residential sector.

3.10.3 Industry
Serbia’s industrial production continued to increase in the first nine
months of 2022, following on from the recovery from the coronacrisis in
2021. However, industrial companies were hit by higher costs of energy
and other inputs, as well as supply chain disruptions.

Steel mill HBIS Serbia warned in July it was preparing to shut down one
of its two furnaces due to the global situation in the market, which led to
reduced demand for steel.

The recovery in steel-using industries and in steel demand is expected
to continue following the COVID-led slump in 2020, but at a very
moderate rate. High uncertainty is set to last at least until the end of
2022, conditional upon developments in the Russia-Ukraine war and its
consequences for global supply chains.

HBIS, the owner of the steel mill in Smederevo, and the Chinese
company Zijin Bor Copper, were the largest exporters from Serbia in
2021.

129 SE Outlook 2023 www.intellinews.com