Page 106 - bne IntelliNews Southeastern Europe Outlook 2025
P. 106
5.10.2 Banks
Serbia's banking sector is well-positioned for growth and stability in 2025, reflecting its strong performance and structural improvements in 2024.
Non-performing loans (NPLs) reached a historic low of 2.7% in October 2024, underscoring the sector's resilience. High levels of liquidity and robust capitalisation ensure that Serbian banks are well-prepared to manage potential risks.
The dinarisation strategy continues to advance, with notable growth in dinar deposits and lending. By October 2024, dinarisation of household receivables had risen to 55.4%, while dinar savings reached a record RSD181bn. Long-term dinar securities saw substantial progress, with nearly 90% of 2024 issuances having maturities of five years or more. These efforts have reduced exchange rate risks and bolstered the domestic financial system.
Credit activity gained momentum throughout 2024, supported by easing credit standards and declining financing costs. By October, total domestic loans grew 7.2% y/y, with household loans expanding by 9.2% and corporate loans by 4.9%. Eased standards for dinar and FX-indexed loans, alongside monetary policy easing by the National Bank of Serbia (NBS) and the European Central Bank (ECB), have created a favorable lending environment.
Internationally, Serbia successfully issued $1.5bn in 10-year sustainability-linked Eurobonds in June 2024, achieving relatively favorable borrowing costs. This milestone enhances Serbia's global financial credibility and establishes a benchmark for sustainable finance in the region.
A significant development for 2025 is Serbia’s anticipated entry into the Single European Payment Area (SEPA), which will streamline euro-denominated transactions and significantly reduce non-cash transaction costs for businesses. This move will align Serbia with European financial standards, boosting regional competitiveness.
5.10.3 Industry
Serbia's industrial sector will remain a key driver of the country’s economic expansion in 2025, contributing equally alongside services to real GDP growth.
Manufacturing, the backbone of Serbia's industrial economy, is expected to lead growth, fuelled by strong foreign direct investment (FDI) inflows into key sectors such as metals, automobiles, food and rubber and plastic. These sectors demonstrated strong performance in 2024, recording notable increases in employment, output and exports.
Serbia’s industrial output in 2025 is expected to continue its strong momentum. Following a 2.5% y/y increase in 2023, industrial output
106 SE Outlook 2025 www.intellinews.com