Page 85 - SE Outlook Regions 2023

3.2.2 Banks

Bosnia’s banking sector is well capitalised and generates significant
profits from year to year. Total net income of banks in the country’s two
entities stood at BAM253.39mn as of end-June 2022, versus
BAM215.07mn a year earlier. Net interest income stood at
BAM418.66mn versus BAM404.91mn at the end of June 2021. Loans
increased to BAM21.92bn from BAM21.67bn with non-performing loans
reaching BAM1.14bn, down from BAM1.23bn a year earlier.

In 2023-2025, as the economic activity is expected to improve, along
with stabilisation of energy prices, more intense lending activity could
be expected. According to the Directorate for Economic Planning
(DEP), loans will increase by 5.5% on average in 2023.

3.2.3 Industry

Bosnia’s industrial output started recovering from the coronacrisis in the
first half of 2022 but since July, it was negatively affected by the
disruption of global supply chains caused by the Russian war in
Ukraine. Through October, Bosnia’s industrial output increased 3% y/y,
according to the latest available statistics office data. However, this rise
was backed by the upward trends in the first half of the year.

As the Russian war in Ukraine has not yet ended, the negative trends
from the second half of 2022 could continue well into 2023.

Statistics office data showed that in the first ten months of 2022 only
manufacturing production posted a growth, rising by 4.8% y/y. On the
other hand, mining decreased by 3% through October, while the
production of electricity, gas and steam fell by 4.7% y/y.

Across the main industrial groups, production increased in capital
goods (up by 9.1% y/y), intermediate goods (up 4.3% y/y) and
non-durable consumer goods (up 3.2% y/y), while it fell in energy (down
3.8% y/y) and durable consumer goods (down 0.5% y/y).

Meanwhile, industrial sales increased by 30.9% y/y in the first eight
months of 2022.

3.2.4 Energy & power

More than two-thirds of Bosnia’s electricity is generated from thermal
power plants. However, as they are old and not modernised, the
country is under increasing pressure from international institutions to
close them as they are among Europe’s top polluters.

In an attempt to compensate for the possible closure of coal-fired plants
and the decision to abandon the construction of a new coal-fired unit at

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