Montenegro’s bank assets rise 4.8% y/y to EUR 2.9bn at end-March as lending recovers.

By bne IntelliNews May 30, 2013

Montenegro’s commercial bank assets increased 4.8% to EUR 2.9bn at end-Q1 supported by higher corporate and household lending, central bank (CBCG) data showed.  The reading is good news and implies a gradual recovery as bank assets have been retreating since January 2010 (latest available). The total assets to GDP ratio stood at 82.7% at end March, slightly down from 82.9% of GDP a year earlier.

The CBCG revised its banking sector statistics for the 2009-2012 period in line with the international accounting standards.  Data prior to 2009 are yet to be published.

Corporate loans which accounted for 42% of total domestic credit rose 5.2% to EUR 1.1bn at end-March. The recovery of corporate credit activity in 2013 was mirrored by strengthening deposit collection and could imply better corporate income and activity. Retail loans (35% share in total loans) also increased 4.5% to EUR 866mn.

Loan growth is expected to support a 2.5% GDP expansion this year following a 0.5% contraction in 2012, according to government estimates. Nevertheless, credit supply remains constrained by high share of non-performing loans (NPL).According to IMF data issued in April 2013, the share of NPL in total loans in Montenegro is among the region’s highest as it rose from 7.2% in 2008 to 18.5% in September 2012.  The central bank introduced in November 2012, a temporary ceiling on the effective lending interest rates on new loans in attempt to limit excessive lending rates and curb rising NPL.

Montenegro's bank assets and loans, EUR mn Dec-09 Dec-10 Dec-11 Dec-12 Mar-13
Total assets 3,025.2 2,943.7 2,809.7 2,808.3 2,889.3
y/y,% n/d -2.7 -4.5 -0.1 4.8
m/m,% -1.7 -0.8 -1.7 -0.5 -0.1
Total loans 2,644.1 2,517.9 2,359.2 2,342.0 2,490.7
y/y,% n/d -4.8 -6.3 -6.3 6.0
m/m,% -4.2 -1.0 -1.6 0.2 -0.7

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