This report profiles the banking sector in Serbia, orienting it in a regional context, analysing trends, and summarizing corporate news from March 2013 to March 2014. The report also provides detailed financial information for leading players in the sector including Banca Intesa Belgrade, Komercijalna Banka, and Unicredit Bank Srbija.

Over the past 12 months, Serbia’s central bank has revoked the banking operating licenses of three domestic-owned lenders—Razvojna Banka Vojvodine (in April 2013), Privredna Banka (in October 2013), and Univerzal Banka (in January 2014). The first two were state-owned, while Univerzal Banka was privately owned. The three banks had a combined market share of 2.9% in terms of total net assets as of end-March 2013. On February 10, 2014, the central bank (NBS) issued a statement in which it emphasized that there are no further banks in a position similar to that of the four lenders delicensed over the past 18 months. NBS further said that the banking sector is stable, well capitalized, liquid, and profitable.

On February 25, 2014, the World Bank approved a USD 200mn loan to strengthen the financial and institutional capacity of Serbia’s Deposit Insurance Agency (DIA). On the same date, the EBRD said it is considering providing a EUR 200mn credit line to DIA, fully guaranteed by the Serbian state.

In April 2013, Belgium's KBC Group sold its Serbian unit, KBC Banka, to Telenor Serbia and Societe Generale Srbija. In February 2014, Serbian sugar maker Sunoko raised its stake in blue-chip lender AIK Banka to 50.37% from some 38% through a tender offer. In addition, in January 2014, Serbian media reported that Turkey’s state-owned Halkbank has filed the sole bid in the sale of Serb lender Cacanska Banka.

Key Points:

• This report includes financial performance, news, and balance sheet information, as well as a comparative matrix of each firm’s fundamentals, for the three leading players in Serbia’s banking sector: Banca Intesa a.d. Beograd (Banca Intesa Belgrade), Komercijalna Banka A.D. Beograd, and Unicredit Bank Srbija a.d. Beograd.

• The capital adequacy ratio of Serbia’s banking sector was 19.9% at end-September 2013, down from 20.23% at end-June, but significantly above the 16.4% at end-September 2012.

• The ratio of NPLs in total loans (gross principal) was 20.7% at end-December, down 0.4 percentage points quarter on quarter, but 2.1 percentage points higher year on year.

• The pre-tax profit of the sector increased by 42.3% year on year to RSD 17bn in January–September 2013.

• Total gross assets of Serbia’s commercial banking sector dropped by a nominal 0.2% to RSD 3.15tn (EUR 27.5bn) at end-2013, reversing positive nominal growth of 8.8% a year earlier.

• Total loans to companies and households decreased by a nominal 4.6% to RSD 1.67tn at end-2013, while total corporate and household deposits increased by 3.4% to RSD 1.47tn.