The aggregate net profit of Kosovo's banking sector increased 58% y/y to EUR 16.2mn in H1 2013 on the back of lower loan loss provisions, preliminary central bank data showed. In June alone, the sector's net profit grew by EUR 4.8mn. As a result, the twelve-month profit amounted to EUR 24.4mn, reaching its highest level since November 2012. However, compared to a year earlier it was 22% lower.

Provisions for loss loans and other losses decreased 27.6% y/y to EUR 19.9mn at end-June, which weighted down the banks' non-interest expenditures by 22.4% y/y. In addition, the general and administrative expenses inched down 1.5% y/y to EUR 49mn. As a result, total expenditures shrank 5.7% y/y to EUR 105.3mn.

The sector's aggregate revenue fell too - by 1.2% to EUR 122.7mn at end-June, thus declining for the fifth month in a row. As it has also been the case since the beginning of the year, the cumulative non-interest income of the banks grew marginally by 2.1% y/y to EUR 23.6mn (driven by fees and commissions earnings), while interest income edged down by 2% y/y to EUR 99mn.

Meanwhile, the assets of Kosovo's commercial banks grew 5.1% y/y to EUR 2.78bn (mainly due to bigger loan stock and higher value of the securities the banks hold). In monthly terms, however, the system's assets fell 1.4%.

The ratio of bank assets to the 2013 GDP forecast stood at 51.3% at end-June - 0.8pps lower compared to its level of 52.1% from a year earlier and 0.7pps below the 52% recorded the month before.