The total assets of Bosnian commercial banks inched up 2.7% y/y to BAM 22.4bn (EUR 11.5bn) at end-May, easing from a 3.2% rise the month before, due to slower corporate and household lending growth, central bank data showed. The reading accounted for 81% of the full-year GDP forecast, down from 83% of GDP a year earlier.

Total loans grew 3.1% y/y to BAM 16.2bn at end-May, after increasing 3.6% a month earlier. They accounted for the bulk (72%) of bank assets.

Corporate loans, which has been the main driver of Bosnia’s loan growth since the end-2012, grew 3.1% to BAM 8.4bn (51% share in total loans), cooling from the 3.6% increase at end-April. Rising long-term loans in local currency continued to support the overall corporate lending growth whereas short and long term corporate FX loans remained in the red at end-May for a seventh straight month.

End-May’s retail loans inched up 1.1% to BAM6.8bn, easing from the 1.4% rise the month before. Moderate household lending growth likely reflects rising unemployment (at over 44%) and stagnating real wages.

Banks foreign assets, which have been declining in annual terms since June 2012, plunged 17.7% y/y to BAM 2.4bn at end-May after shrinking 10.1% the month before.

Bosnia’s lending growth will likely flatten at 4% in 2013, the same as the year before, due to high share of non-performing loans (at 13.8% at end-March) and sluggish deposit growth, according to the latest forecast of the government Directorate for Economic Planning (DEP). Credit growth is expected to quicken in the mid-term, supported by improved deposit collection and rising investment which will boost credit demand.