The aggregate net profit of commercial banks in Kosovo rose 71% y/y to EUR 18.1mn in the first seven months of 2013 on decreasing loan loss provisions, which fell 21% y/y over the period, data published by the central bank showed.

In July 2013 alone, the banking sector earned a net profit of EUR 1.9mn as compared to EUR 0.3mn a year earlier.

However, the sector's profit after taxes for the twelve-month period ending in July shrank 9.6% y/y to EUR 26mn.

Jan-Jul expenditures of Kosovo's commercial banks decreased 4% y/y to EUR 125.2mn. Loan loss provisions declined 21% y/y to EUR 25.2mn, pulling down the banks' non-interest expenditures by 16.7% y/y to EUR 30.5mn. In addition, the general and administrative expenses edged down 1% y/y to EUR 57.5mn. On the other hand, interest costs grew 4.3% y/y to EUR 37.2mn as rates on deposits were 0.23pps y/y higher in July.

Meanwhile, the banking sector's aggregate revenue fell 0.7% to EUR 144.6mn at end-July, declining for a sixth consecutive month. Interest income, the banks' main revenue driver, inched down 1.5% y/y to EUR 116.5mn in Jan-July. Growth of non-interest income, though, quickened to 2.8% y/y in July from 2.2% the previous month (driven by bigger fees and commissions earnings).

The central bank data showed that the assets of Kosovo's commercial banks climbed 5.4% y/y to EUR 2.86bn at end-July. In monthly terms, the assets were up 2.6%.

The ratio of bank assets to the government's 2013 GDP forecast stood at 52.7% in July 2013 versus 53.3% a year earlier.