Serbia Economic and FDI Outlook

National Bank of Serbia Traditional Banking Mostly Financed by Domestic Deposits Adequate structure of banking sector assets Chart 33 Structure of banking sector assets (RSD bn) Improving the quality of the banking sector assets Chart 34 Asset quality - Non-performing loans (NPL) (RSD bn) 7,000 Cash and assets with central bank Securities 6,000 Loans Other 5,000 Total 4,000 3,000 2,000 1,000 500 400 300 200 100 Finance and insurance sector Public non financial sector Corporate sector Entrepreneurial sector General government sector Household sector Foreign persons sector Registered agricultural producers Other legal entities sector Total . • 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 2015 2016 2017 Source: NBS 2018 2019 2020 2021 2022 2023 Risk aversion during the crisis led to intensified banks' investments in securities (predominantly low-risk government securities), the share of which stabilized since 2015 and amounts 12.4% of the total net banking sector assets at the end of February 2024. Stability of retail and corporate deposits in funding mix is present, with share in total liabilities of 45% and 32%, respectively at the end of February 2024. Despite high loan portfolio euroization, currency matching of assets and liabilities is present, with net open position of 1.7% of regulatory capital at end of February 2024. 0 2017 2018 2019 2020 2022 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 2015 2016 2021 2023 Source: NBS • • Successful implementation of NPLs resolution activities, led to a record low level of NPLs. The amounts of NPL continue to stand still and are well below its pre-crisis level. The main channels for the NPLs reduction were repayments, write-offs, and transfer (sale) to third parties. At the end of February 2024, the largest portion of total NPLs related to the household sector (54.0%) and corporate sector (32.0%). 19

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