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indicators are high and non-performing loans (NPLs) have continued to decline despite the withdrawal of COVID-19 support measures and gradual application of stricter asset classification standards.
The share of NPLs in Montenegro stood at 4.7% in September 2024, down from 5% the month before, according to the latest available central bank data.
The share of NPLs net of provision capital stock stood at 14% at the end of September versus 15.7% as of end-June, central bank data showed.
At the end of September, the exposure of Montenegrin commercial banks to systematic risks was at a moderate level, the central bank said.
Regulatory capital to risk-weighted assets was 19.8% at the end of September, up from 19.5% as of end-June. The share of Tier 1 capital to risk-weighted assets was 19.4% versus 19% at the end of June.
Montenegrin commercial banks' assets increased 3.2% year on year to €7bn at the end of October, after rising by 3% y/y the previous month.
Bank loans, which accounted for 66.8% of total assets, increased 14.9% y/y in October after moving up by 15.3% y/y in September, with total stock reaching €4.68bn. The increase reflected a higher rise in lending to households.
Corporate lending went up 11.9% y/y to €1.6bn, while household loans grew 15.9% y/y to €1.97bn at end-October.
Montenegro’s commercial bank deposits increased by 2.7% year on year in October, after rising by 2.6% y/y the month before, reaching €5.68bn, central bank data showed on November 22.
Corporate deposits decreased by 7.4% y/y, after going down by 8.1% y/y in September. The total corporate deposit stock reached €2.14bn. Household deposits were 7.5% y/y higher y/y at €2.88bn, after rising by 8.3% y/y in September.
The average effective interest rate on new loans in Montenegro moved down 0.63pp y/y in October to 6.71% after dropping by 0.41pp y/y the month before.
Meanwhile, Montenegrin commercial banks are receiving financial support to fund green projects. The EBRD secured a €3mn loan to Montenegro’s NLB Banka for the financing of green projects of local small- and medium-sized enterprises. The loan is provided under the SME Go Green programme, co-funded by the EU through the Western Balkans Investment Framework (WBIF).
NLB Banka will use the funds to provide credits to SMEs for projects related to green and sustainable technologies and inclusivity, with at least 25% of enterprises expected to be led by women. If SMEs complete the projects successfully, they will be eligible for a cashback
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