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FINANCIAL STABILITY DEPARTMENT

QUARTERLY REVIEW OF THE DYNAMICS OF

FINANCIAL STABILITY INDICATORS FOR THE

REPUBLIC OF SERBIA

First Quarter 2018

June 2018

Chart 1.1. Financial soundness of Serbian banks compared to regional average annually 3

Chart 1.2. Overview of key macroeconomic risks annually 4

Table 1.1. Key macroprudential indicators quarterly 5

Table 1.2. Financial sector structure quarterly 6

Chart 2.1. Capital adequacy ratio quarterly 9

Chart 2.2. Tier 1 regulatory capital to risk-weighted assets quarterly 9

Chart 2.3. Distribution of capital adequacy ratio (number of banks in each category) quarterly 9

Chart 2.4. Distribution of capital adequacy ratio (market share) quarterly 9

Chart 2.5. Distribution of Tier 1 to risk-weighted assets (number of banks in each category) quarterly 9

Chart 2.6. Distribution of Tier 1 to risk-weighted assets (market share) quarterly 9

Chart 2.7. Leverage indicators quarterly 9

Chart 2.8. FX-loans to total loans quarterly 13

Chart 2.9. FX-deposits to total deposits quarterly 13

Chart 2.10. New FX-loans to total new loans monthly 13

Chart 2.11. New FX-deposits to total new deposits monthly 13

Chart 2.12. Bank claims on corporate sector by sectoral structure at certain date 13

Chart 2.13. Non-performing loans quarterly 13

Chart 2.14. Non-performing loans to capital quarterly 13

Chart 2.15. Non-performing loans coverage quarterly 13

Chart 2.16. Categories D and E quarterly 14

Chart 2.17. Risk-weighted assets to total assets quarterly 14

Chart 2.18. Risk-weighted assets and total assets growth quarterly 14

Chart 2.19. Risk profile of balance sheet assets (prior to introduction of Basel II) quarterly 14

Chart 2.20. Risk profile of off-balance sheet assets (prior to introduction of Basel II) quarterly 14

Chart 2.21. Risk profile of assets (prior to introduction of Basel II) quarterly 14

Chart 2.22. Risk profile of credit risk-weighted assets (in accordance with Basel II) quarterly 14

Chart 2.23. Funding sources quarterly 14

Chart 2.24. Total assets structure quarterly 15

Chart 2.25. Liabilities structure quarterly 15

Chart 2.26. Off-balance sheet assets: contingent liabilities quarterly 15

Chart 2.27. Profitability indicators quarterly 19

Chart 2.28. Banks w/ ROE below 5% quarterly 19

Chart 2.29. Banks that have encountered losses quarterly 19

Chart 2.30. Net operating income structure quarterly 19

Chart 2.31. Contributions to net operating income growth quarterly 19

Chart 2.32. Gain/loss before taxes quarterly 19

Chart 2.33. Staff costs quarterly 19

Chart 2.34. Cost-to-income ratio quarterly 19

Chart 2.35. Banks w/ cost-to-income ratio above 80% quarterly 20

Chart 2.36. Selected elements of gain/loss to total assets quarterly 20

Chart 2.37. Interest claims (liabilities) to total assets (liabilities) quarterly 20

Chart 2.38. Interest rates on RSD loans monthly 20

Chart 2.39. Interest rates on EUR loans monthly 20

Chart 2.40. Interest rates on RSD saving deposits monthly 20

Chart 2.41. Interest rates on EUR saving deposits monthly 20

Chart 2.42. LTD ratio monthly 23

Chart 2.43. Average monthly liquidity ratio monthly 23

Chart 2.44. Average monthly narrow liquidity ratio monthly 23

Chart 2.45. Liquid assets monthly 23

Chart 2.46. Household and corporate deposits to monetary aggregates monthly 23

Chart 2.47. Banks` FX-reserves to household and corporate FX-deposits monthly 23

Chart 2.49. Quarterly breakdown of the sector's long and short FX position (in EUR) and foreign exchange

risk ratio

quarterly 27

2.1. Capital adequacy

2.5. Sensitivity to market risks

2.4. Liquidity

2.3. Profitability

2.2. Asset and funding quality

1. Financial Soundness Indicators

2. Banking sector

Content

Chart 3.1. Total premium per capita at certain date 31

Chart 3.2. Total premium to GDP at certain date 31

Chart 3.3. Total property insurance premium annually 31

Chart 3.4. Ownership structure of insurance companies at certain date 31

Chart 3.5. Coverage structure of technical reserves in life insurance at certain date 31

Chart 3.6. Coverage structure of technical reserves in non-life insurance at certain date 31

Chart 3.7. Profitability indicators for life insurance companies annually 31

Chart 3.8. Profitability indicators for non-life insurance companies annually 31

Chart 3.9. Combined insurance ratio quarterly 32

Chart 3.10. Total VPF net assets and index FONDex monthly 35

Chart 3.11. Net assets growth and net contributions to VPF quarterly 35

Chart 3.12. VPF asset structure at certain date 35

Chart 3.13. Investment structure by lessee at certain date 39

Chart 3.14. Investment structure by leasing object at certain date 39

Chart 4.1. Industrial production index quarterly 43

Chart 4.2. Real growth of corporate loans monthly 43

Chart 4.3. Currency structure of domestic corporate loans quarterly 43

Chart 4.4. Enforced collection quarterly 43

Chart 5.1. Consumer prices and net household earnings monthly 47

Chart 5.2. Household loans growth monthly 47

Chart 5.3. Currency structure of household loans monthly 47

Chart 5.4. Structure of household savings quarterly 47

Chart 5.5. Contributions to real growth of FX savings monthly 47

Chart 5.6. Contributions to real growth of RSD savings monthly 47

Table 5.1. Household sector performance indicators quarterly 48

Chart 6.1. Regional sovereign credit ratings dynamics monthly 51

Chart 6.2. Sovereign credit ratings dynamics of home countries of banks whose subsidiaries operate in

Serbia

monthly 51

Chart 6.3. CDS spreads on bonds of home countries of parent banks whose subsidiaries operate in Serbia monthly 51

Chart 6.4. CDS spread on Greek bonds daily 51

Chart 6.5. Sovereign bond yields: Serbia and CEE region daily 51

Chart 6.6. Sovereign bond yields: Serbia and home countries of parent banks whose subsidiaries operate in

Serbia

daily 51

Chart 6.7. Greek bond yield daily 51

Chart 6.8. Emerging Market Bond Index: Serbia and EMBI Global monthly 51

Chart 6.9. Emerging Market Bond Index: Serbia and CEE countries monthly 52

Chart 6.10. ECB interest rates and EONIA daily 52

Chart 6.11. Risk premium on the interbank money market monthly 52

Chart 6.12. Inflation in the eurozone monthly 52

Chart 6.13. CDS spreads on bonds issued by Greek parent banks whose subsidiaries operate in Serbia daily 52

Chart 6.14. CDS spreads on bonds issued by Italian parent banks whose subsidiaries operate in Serbia monthly 52

Chart 6.15. CDS spreads on bonds issued by Austrian parent banks whose subsidiaries operate in Serbia monthly 52

Chart 6.16. CDS spreads on bonds issued by French parent banks whose subsidiaries operate in Serbia monthly 52

Chart 6.17. Stock price dynamics of Greek parent banks whose subsidiaries operate in Serbia daily 53

Chart 6.18. Stock price dynamics of Italian parent banks whose subsidiaries operate in Serbia daily 53

Chart 6.19. Stock price dynamics of Austrian parent banks whose subsidiaries operate in Serbia daily 53

Chart 6.20. Stock price dynamics of French parent banks whose subsidiaries operate in Serbia daily 53

Chart 6.21. Ownership structure of banks in Serbia quarterly 53

Chart 6.22. BIS member banks` gross exposure towards emerging markets quarterly 53

6. Macroeconomic environment

6.1. International macroeconomic environment

3.3. Leasing sector

3.2. Voluntary pension funds sector

3.1. Insurance sector

3. Non-banking financial sector

4. Corporate sector

5. Household sector

Chart 6.23. Contributions to real GDP growth by production-side components quarterly 57

Chart 6.24. Contributions to real GDP growth by expenditure-side components quarterly 57

Chart 6.25. Industrial production index monthly 57

Chart 6.26. Unemployment rate quarterly 57

Chart 6.27. Consumer price index monthly 57

Chart 6.28. Contributions to CPI changes monthly 57

Chart 6.29. NBS key policy rate and BEONIA daily 57

Chart 6.30. 3M money-market interest rates monthly 57

Chart 6.31. BELIBOR interest rates monthly 58

Chart 6.32. Exchange rate dynamics of national currencies against the euro daily 58

Chart 6.33. Dynamics of the RSD exchange rate against EUR, CHF and USD monthly 58

Chart 6.34. Dynamics of the RSD exchange rate against EUR and NBS interventions on the interbank FX

market

monthly 58

Chart 6.35. Volatility of the exchange rate monthly 58

Chart 6.36. Bid-ask spread on the interbank FX market daily 58

Chart 6.37. Current account deficit quarterly 58

Chart 6.38. Net foreign direct investments quarterly 58

Chart 6.39. Coverage of imports by FX reserves quarterly 61

Chart 6.40. Coverage of short-term external debt at remaining maturity by FX reserves quarterly 61

Chart 6.41. Coverage of high-power (H) money by FX reserves quarterly 61

Chart 6.42. Coverage of M1 monetary aggregate by FX reserves quarterly 61

Chart 6.43. Fiscal result monthly 65

Chart 6.44. Public revenues and expenditures quarterly 65

Chart 6.45. Public debt dynamics quarterly 65

Chart 6.46. Public debt to GDP monthly 65

Chart 6.47. Public debt by currency quarterly 65

Chart 6.48. Public debt by original maturity monthly 65

Chart 6.49. Public debt by remaining maturity monthly 65

Chart 6.50. Internal and external component of public debt quarterly 65

Chart 6.51. Government securities sold on the primary market by buyers monthly 66

Chart 7.1. Primary market demand for RSD government bonds monthly 69

Chart 7.2. Realisation rate and foreign investors` share in auctions of RSD government bonds monthly 69

Chart 7.3. Interest rates on treasury bills, primary market monthly 69

Chart 7.4. Interest rates on zero coupon RSD government securities monthly 69

Chart 7.5. Foreign investors` share at RSD government bond auctions quarterly 69

Chart 7.6. RSD government securities, outstanding stock quarterly 69

Chart 7.7. RSD government bonds investors structure monthly 69

Chart 7.8. Euro-denominated government bonds, outstanding stock quarterly 69

Chart 7.9. RSD government bonds, annual turnover monthly 70

Chart 7.10. Maturity of RSD government securities monthly 70

Chart 7.11. Belgrade Stock Exchange market capitalisation quarterly 70

Chart 7.12. Belgrade Stock Exchange equity market turnover monthly 70

Chart 7.13. Stock markets' indices daily 70

Chart 7.14. Real estate index DOMex quarterly 70

Chart 7.15. Indices of the number of newly issued building permits monthly 70

Chart 7.16. Price-to-income quarterly 70

72

7. Financial markets and real estate market

6.3. FX reserves adequacy indicators

6.4. Indebtedness of the Republic of Serbia

Definitions

6.2. Domestic macroeconomic environment

1. Financial soundness indicators

1

Chart 1.1.

Source: GFSR and National Bank of Serbia.

Financial soundness of Serbian banking sector compared to

regional average

CAR

C/A

NPL

Provisions/NPL

ROA

ROE

Serbia, 2008 Region, 2008

CAR

C/A

NPL

Provisions/NPL

ROA

ROE


CAR

C/A

NPL

Provisions/NPL

ROA

ROE


3

Chart 1.2.

* Share of FX and FX-indexed loans in total loans of corporate

and households.

Source: National Bank of Serbia.

Overview of key macroeconomic risks

Currentaccount deficit

(% of GDP)

Level ofeuroisation*

Coverage ofimports by FX

reserves(inverse scale)

Public debt(% of GDP)

Privateexternal debt(% of GDP)

2008 2016


(% of GDP)






2008 2017


(% of GDP)






2016 2017

4

Table 1.1. Serbia: Key Macroprudential Indicators1)

(in % unless otherwise indicated)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 I 2018

Capital Adequacy

Regulatory capital to risk weighted assets 21.9 21.4 19.9 19.1 19.9 20.9 20.0 20.9 21.8 22.6 22.7

Tier I capital to risk weighted assets1)

17.9 16.5 15.9 18.1 19.0 19.3 17.6 18.8 20.0 21.6 21.8

Balance sheet capital to balance sheet assets 23.6 20.7 19.7 20.2 20.5 20.9 20.7 20.3 19.5 19.8 19.9

Asset Composition and Quality

Agriculture loans to total loans 3.3 3.1 3.0 2.8 3.0 2.7 3.5 3.7 3.6 3.5 3.5

Industry loans to total loans 18.4 17.9 19.3 17.2 17.9 18.4 19.2 18.4 16.5 16.2 16.6

Trade loans to total loans 16.9 17.3 16.6 14.7 15.0 13.5 13.9 13.9 14.3 14.6 15.2

Construction loans to total loans 5.8 5.3 6.9 6.2 5.8 4.6 4.2 3.8 4.1 4.0 4.2

Other loans to enterprises to total loans 8.1 9.8 9.7 10.9 12.8 11.4 11.5 11.1 10.6 10.3 10.4

Loans to households to total loans 36.3 32.9 34.1 32.4 33.6 35.4 38.2 39.1 41.4 42.8 44.6

Of which: Mortgage loans 13.9 13.8 15.4 15.0 16.1 16.8 18.0 18.1 17.9 17.0 17.5

Loans to other economic sectors to total loans 11.3 13.8 10.5 15.7 12.0 14.0 9.6 10.0 9.6 8.6 5.6

Gross non-performing loans (NPL) to total gross loans 11.3 15.7 16.9 19.0 18.6 21.4 21.5 21.6 17.0 9.8 9.2

Net non-performing loans (NPL) to total net loans 5.3 8.5 9.8 10.5 10.4 11.9 11.1 9.5 6.3 4.4 3.9

Specific provisions of total loans to total gross loans 8.3 9.6 9.1 10.9 10.2 11.9 12.7 14.4 12.4 6.6 6.7

IFRS provisions of total loans to gross non-performing loans (NPL) 73.2 61.4 53.9 57.0 54.9 55.8 59.0 66.8 72.9 66.8 73.2

Specific provisions of NPL to gross NPL 56.9 50.9 47.2 51.0 50.0 50.9 54.9 62.3 67.8 58.1 60.8

Regulatory provisions to gross non-performing loans (NPL) 153.6 142.5 133.6 121.4 120.7 113.8 114.5 114.2 118.9 133.2 135.7

Large exposures to regulatory capital - - - 110.1 104.5 90.4 130.5 115.7 86.0 69.3 73.3

Profitability

ROA 2.1 1.0 1.1 0.0 0.4 -0.1 0.1 0.3 0.7 2.1 2.1

ROE 9.3 4.6 5.4 0.2 2.1 -0.4 0.6 1.6 3.4 10.6 10.5

Net interest margin to average balance sheet assets 5.7 5.1 4.6 4.6 4.3 4.2 4.3 4.3 3.9 3.7 3.7

Net interest margin to gross operating income 64.2 67.0 68.3 72.0 69.2 72.6 71.4 70.7 70.4 63.7 71.4

Operating expenses to gross operating income 59.0 62.6 63.5 61.8 66.1 65.3 64.5 62.2 64.8 59.9 60.8

Operating expenses to average balance sheet assets -5.2 4.8 4.3 3.9 4.1 3.8 3.9 3.8 3.6 3.4 3.1

Personnel expenses to operating expenses 41.2 41.9 41.1 41.9 38.3 39.4 36.7 36.7 37.7 37.4 40.0

Liquidity

Liquid assets to total balance sheet assets 47.8 49.0 43.7 42.3 38.9 41.0 42.2 40.5 38.9 35.1 35.9

Liquid assets to short-term liabilities 75.7 75.1 70.1 70.6 65.0 66.4 66.7 61.3 56.6 50.9 52.3

Liquid assets (core) to total balance sheet assets 47.8 48.2 41.8 40.3 35.2 36.1 35.7 32.5 30.5 27.5 26.5

Liquid assets (core) to short-term liabilities 75.7 73.8 67.1 67.3 58.9 58.3 56.3 49.3 44.3 39.9 38.6

FX-denominated and FX-indexed loans to total gross loans 68.8 70.2 71.0 69.0 73.1 70.9 70.0 71.9 69.3 67.5 68.8

FX-denominated and FX- indexed deposits to total deposits 71.8 75.4 79.1 75.7 77.6 73.3 72.1 70.2 69.3 68.0 69.0

Loans to non-financial sector to deposits of non-financial sector 125.3 124.8 125.9 127.0 119.9 113.8 102.7 99.0 92.0 93.2 94.5

Loans to non-financial and non-public sector to deposits of non-financial and non-

public sector127.1 125.3 122.8 124.1 117.8 112.5 102.4 100.0 93.3 94.8 95.1

FX denominated and FX-indexed loans to FX denominated and FX-indexed

deposits 109.8 99.8 99.1 109.7 106.7 105.3 95.9 97.6 89.1 88.2 86.3

Deposits to total balance sheet assets 57.7 60.2 59.4 57.9 59.0 60.7 63.7 65.9 69.5 70.1 70.1

FX denominated and FX-indexed liabilities to total liabilities 74.3 77.8 81.8 79.0 80.1 76.7 74.5 72.4 70.7 69.4 70.2

Sensitivity to Market Risk

Net open FX position (overall) to regulatory capital 4.2 1.1 1.6 4.2 4.6 3.3 2.6 2.8 2.3 2.4 3.0

Оff-balance sheet items to total balance sheet assets 121.4 106.7 97.7 111.0 103.5 111.0 207.1 234.1 219.6 209.4 234.2

Classified off-balance sheet items to total classified balance sheet assets 56.2 43.3 33.9 32.0 26.1 28.8 27.6 30.6 32.4 36.4 36.0

Market-based Indicators

Credit rating

S&P BB- BB- BB- BB BB- BB- BB- BB- BB- BB BB

Fitch BB- BB- BB- BB- BB- BB- B+ B+ BB- BB BB

Moody's - - - - - B1 B1 B1 B1 Ba3 Ba3

Country`s risk premium - EMBI (aop, in bp) 501.5 625.7 419.0 457.0 522.5 403.5 291.6 279.6 270.0 153.7 108.9

International Reserves Adequacy Indicators

International reserves to months of imports (in mos)

Gross international reserves 5.4 9.7 8.4 8.8 7.7 7.6 6.6 6.7 6.2 5.3 5.3

Net international reserves 3.9 5.9 4.3 4.9 4.7 5.3 5.1 5.4 5.1 4.4 4.4

International reserves to short-term liabilities at remaining maturity

Gross international reserves 162.6 220.6 191.2 299.8 237.3 268.6 294.0 256.4 239.7 234.1 n/a

Net international reserves 117.1 135.0 97.0 166.0 143.8 187.7 227.2 208.0 196.5 194.4 n/a


1) An adjustment is made in the deductables of Tier 1 capital.

Data download and use allowed. Due to technical reasons, NBS makes no warranties as to the accuracy or completeness of the information.

5

Table 1.2. Serbia: Financial sector structure

RSD billion % RSD billion % RSD billion % RSD billion % RSD billion % RSD billion % RSD billion % RSD billion %

Financial sector 87 2,868 100 85 3,108 100 80 3,081 100 76 3,226 100 77 3,329 100 76 3,556 100 73 3,714 100 73 3,743 100

(in % of GDP) 84.2% 86.7% 79.5% 82.6% 82.3% 83.4% 83.2% 82.6%

Banking system 33 2,650 92.4 32 2,880 92.6 30 2,846 92.4 29 2,969 92.0 30 3,048 91.6 30 3,242 91.2 29 3,369 90.7 29 3,387 90.5

State-owned banks 8 472 16.5 8 522 16.8 6 534 17.3 6 571 17.7 6 550 16.5 6 561 15.8 6 544 14.6 6 546 14.6

Local private banks 4 213 7.4 3 194 6.3 3 196 6.4 2 187 5.8 1 179 5.4 2 195 5.5 2 236 6.4 2 228 6.1

Foreign-owned banks 21 1,965 68.5 21 2,163 69.6 21 2,117 68.7 21 2,211 68.5 23 2,319 69.7 22 2,486 69.9 21 2,590 69.7 21 2,612 69.8

Greek 4 393 13.7 4 426 13.7 4 409 13.3 4 418 13.0 4 395 11.9 4 403 11.3 2 210 5.6 2 214 5.7

Italian 2 591 20.6 2 657 21.1 2 679 22.0 2 738 22.9 2 796 23.9 2 884 24.8 2 928 25.0 2 949 25.4

French 3 263 9.2 3 287 9.2 3 299 9.7 3 304 9.4 3 316 9.5 3 327 9.2 2 375 10.1 2 375 10.0

Austrian 4 493 17.2 3 449 14.4 3 429 13.9 3 441 13.7 3 453 13.6 3 494 13.9 2 427 11.5 2 433 11.6

Other 8 225 7.8 9 345 11.1 9 301 9.8 9 310 9.6 11 359 10.8 10 378 10.6 13 651 17.5 13 642 17.1

Nonbank financial institutions 54 218 7.6 53 228 7.4 50 235 7.6 47 257 8.0 47 281 8.4 46 315 8.8 44 344 9.3 44 357 9.5

Insurance companies 28 126 4.4 28 140 4.5 28 148 4.8 25 168 5.2 24 192 5.8 23 216 6.1 21 233 6.3 21 245 6.6

Pension funds 9 12 0.4 9 16 0.5 6 20 0.6 6 24 0.7 7 29 0.9 7 33 0.9 7 36 1.0 7 37 1.0

Leasing companies 17 80 2.8 16 72 2.3 16 67 2.2 16 65 2.0 16 60 1.8 16 66 1.9 16 75 2.0 16 74 2.0


2011 2012 2015

No.

AssetsAssets

2013

No.

Assets

No.

Assets

No.

2014 2016

No.

Assets

No.

Assets

No.

I 2018

Assets

2017

No.

Assets

6

2.1. Capital adequacy

2. Banking sector

7

Chart 2.1. Chart 2.2.

(%) (%)

* Up to Q4 2011 modified Tier 1 regulatory capital is shown.

Source: National Bank of Serbia. Source: National Bank of Serbia.


(number of banks in each category) (market share*, %)

* Measured by the share in total net assets of the banking sector.



(number of banks in each category) (market share*, %)



Chart 2.7.

(%)


Distribution of capital adequacy ratio Distribution of capital adequacy ratio

Distribution of Tier 1 to risk-weighted assets Distribution of Tier 1 to risk-weighted assets

Capital adequacy ratio Tier 1 regulatory capital to risk-weighted assets*

Leverage indicators

0

5

10

15

20

25

III I III I III I III I III I III I III I III I III I III I

20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Capital adequacy ratio Regulatory minimum

0

5

10

15

20

25


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18

0

5

10

15

20

25

30

35


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Up to 15% From 15 to 20% From 20 to 25% Over 25%

0

20

40

60

80

100


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18


0

5

10

15

20

25

30

35


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18


0

20

40

60

80

100


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18


0

5

10

15

20

25

30

l III I III I III I III I III I III I III I III I III I III I

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017'18

Regulatory capital to total assets Capital to assets

9

2. Banking sector

2.2. Asset and funding quality

11

Transportatio

1,0001,2001,4001,6001,8002,000

100

120

140

160

12


(RSD bn) (%) (RSD bn) (%)






(March 2018, %)



(%)

* Balance sheet.


FX-claims to total banking sector claims on corporate

sector and households

Bank claims on corporate sector by sectoral structure Non-performing loans

New FX-loans to total new loans

FX-deposits to total deposits

(%)

New FX-deposits to total new deposits

(share in total gross loans, %)

Non-performing loans to capital Non-performing loans coverage

Agriculture, forestry and

fishing:7%

Mining, manufacturin

g:30%

Electricity:2%

Construction:8%

Trade:29%

Transportation:

12%

Real estate:8%

Education, health and social care:

0%

Other:4%

6062646668707274767880

0200400600800

1,0001,2001,4001,6001,8002,000


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18FX-claims on households (lhs)Dinar claims on households (lhs)FX- claims on enterprises (lhs)Dinar claims on enterprises (lhs)Total FX-claims to total claims (rhs)

626466687072747678808284

0200400600800

1,0001,2001,4001,6001,800


20082009 2010 2011 2012 2013 2014 2015 2016 2017'18FX-deposits of households (lhs)Dinar deposits of households (lhs)FX-deposits of enterprises (lhs)Dinar deposits of enterprises (lhs)Total FX-deposits to total deposits(rhs)

-551525354555657585

0

20

40

60

80

100

120

140

160

1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1

2012 2013 2014 2015 2016 2017 '18

FX-loans to households (lhs)Dinar loans to households (lhs)FX-loans to enterprises (lhs)Dinar loans to enterprises (lhs)Total new FX-loans to total new loans (rhs)

0

20

40

60

80

100

0

100

200

300

400

500

1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1

2012 2013 2014 2015 2016 2017 '18FX-deposits of households (lhs)Dinar deposits of households (lhs)FX-deposits of enterprises (lhs)Dinar deposits of enterprises(lhs)Total new FX-deposits to total new deposits (rhs)

10

.2 11

.314

.2 16

.5 17

.71

5.7

16

.51

7.5

17

.81

6.9

17

.1 18

.618

.81

9.0 20

.41

9.5

19

.918

.6 19

.91

9.9 21

.12

1.4

22

.22

3.0

23

.02

1.5

22

.62

2.8

22

.02

1.6

20

.92

0.2

19

.517

.016

.81

5.6

12

.29.8

9.2

0

5

10

15

20

25


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18

0

20

40

60

80

100


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Net NPLs toTier 1Net NPLs to regulatory capitalNet NPLs to capital

0

50

100

150

200

250


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Allowances for impairment of NPLs to NPLs

Calculated reserve for estimated BS* losses to NPLs

Calculated reserve for estimated losses to NPLs

10

15

20

25

13


(%) (%) (%)

* Shareholders' equity, government and other capital.



(%)

* Changes in the classification of assets by risk weights.



(prior to introduction of Basel II) (total on and off-balance sheetassets, prior to introduction of Basel II)

(%) (%)

* Changes in the classification of assets by risk weights. * Changes in the classification of assets by risk weights.



(%) (RSD bn) (%)


(index, September 2008 = 100)

Risk profile of balance sheet assets

(prior to introduction of Basel II)

Risk profile of off-balance sheet assets Risk profile of assets

Categories D and E Risk-weighted assets to total assets

Risk-weighted assets and total assets growth

Funding sourcesRisk profile of credit risk-weighted assets

20

40

60

80

100

40

60

80

100

120

140

0

5

10

15

20

25


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Share in total classified assets (lhs)

Share in equity* (rhs)

86

.7 93

.59

4.2

89

.183

.47

9.6

79

.380

.48

0.7

80

.78

2.2

83

.381

.56

3.7

64

.16

2.7

63

.26

1.2

60

.65

9.8

58

.558

.256

.15

6.5

55

.257

.35

7.1

55

.456

.05

7.1

57

.45

7.6

58

.45

8.0

59

.260

.46

3.2

63

.663

.8

0

20

40

60

80

100


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18

100

120

140

160

180

200

220


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Risk-weighted assets Total assets

0

20

40

60

80

100

I III I III I III I III I III* I III I III I III

2004 2005 2006 2007 2008 2009 2010 2011

Weight 0% Weight 20% Weight 50%


0

20

40

60

80

100


2004 2005 2006 2007 2008 2009 2010 2011



0

20

40

60

80

100


2004 2005 2006 2007 2008 2009 2010 2011



0

20

40

60

80

100

IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I

2011 2012 2013 2014 2015 2016 2017 '18Weight 0% Weight 10% Weight 20% Weight 35%

Weight 50% Weight 75% Weight 100% Weight 150%

70

80

90

100

0

400

800

1,200

1,600

2,000

2,400

2,800

3,200

I III I III I III I III I III I III I III I III I III I III I

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017'18Liabilities (lhs)Equity (lhs)Liabilities to total sources (rhs)

14


(%) (%)


Chart 2.26.

(%)


Liabilities structureTotal assets structure

Off-balance sheet assets: contingent liabilities

100

0

20

40

60

80

100


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18Foreign assets Claims on governmentClaims on NBS Claims on other sectorsOther assets

0

10

20

30

40

50

60

70

80

90

100


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Foreign liabilities Total deposits Еquity and reserves Other

0

20

40

60

80

100

120

140

160

180


20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Contingent liabilities to total off-balance sheet assets

Capital to contingent liabilities

15

2.3. Profitability

2. Banking sector

17

12

16

18


(%) (number of banks) (%)




(number of banks) (%) (%)

* Measured by the share in total net assets of the banking sector. * Net income from the trade in securities and dividend income.

Source: National Bank of Serbia Source: National Bank of Serbia.


(y-o-y growth, pp) (annualized)

(RSD bn)

* Net income from the trade in securities and dividend income.



(share of operating expenses)

(%) (%)

* Excluding 5% of largest observations.


Staff costs Ratio of operating expenses to total operating income

Contributions to net operating income growth

Profitability indicators Banks w/ ROE below 5%

Gain/loss before taxes

Banks that have encountered losses Net operating income structure

-2

0

2

4

6

8

10

12

IV II IV II IV II IV II IV II IV II IV II IV II IV II IV

2009 2010 2011 2012 2013 2014 '15 '16 '17 '18

ROA ROE

-8

-4

0

4

8

12

16

IV II IV II IV II IV II IV II IV II IV II IV II IV

2010 2011 2012 2013 2014 '15 '16 '17 '18Other*Net income from fees and commissionsNet interest marginNet operating income growth

Loss of Agrobanka:

29.7 RSD bn

-55

-35

-15

5

25

45

65

85


2009 2010 2011 2012 2013 2014 '15 '16 '17 '18Gain Loss Net gain

10

12

14

16

0

7

14

21

28

0

4

8

12

16


2009 2010 2011 2012 2013 2014 '15 '16 '17 '18

Number (lhs) Market share (rhs)*

0

20

40

60

80

100


2009 2010 2011 2012 2013 2014 '15 '16 '17 '18

Other*Net income from fees and commissionsNet interest margin

0.0

0.3

0.6

0.9

1.2

1.5

0

10

20

30

40

50

0

5

10

15

20

25


2009 2010 2011 2012 2013 2014 '15 '16 '17 '18


0

5

10

15

20

25

30

35

40

45


2009 2010 2011 2012 2013 2014 '15 '16 '17 '18

0306090

120150180210240270300330

I II III IV I II III IV I II III IV I

'15 '16 '17 '18

Range by banks* Banking sector

19


(number of banks) (%) (%)




(households and enterprises, new business)

(%) (%) (%)



(households and enterprises, new business) (households and enterprises, new business)

(%) (%)

* EUR-denominated and EUR-indexed loans.


Chart 2.41.

(households and enterprises, new business)

(%)

* EUR-denominated and EUR-indexed deposits.


Interest rates on EUR saving deposits*

Selected elements of gain/loss to total assetsBanks w/ Ratio of operating expenses to total

operating income above 80%

Interest claims (liabilities) to total assets (liabillities) Interes rates on RSD loans

Interest rates on EUR loans* Interest rates on RSD saving deposits

6

12

18

24

30

36

42

0

2

4

6

8

10

12

14

16

I II III IV I II III IV I II III IV I

'15 '16 '17 '18


0

5

10

15

20

25

12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12

2011 2012 2013 2014 '15 '16 '17 '18

Households Enterprises Total

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.0

0.3

0.6

0.9

1.2

1.5


2009 2010 2011 2012 2013 2014 '15 '16 '17 '18

Interest claims/total assets (lhs)Interest liabillities/total liabillities (rhs)

0

2

4

6


2009 2010 2011 2012 2013 2014 '15 '16 '17 '18Net interest marginNet income from fees and commissionsStaff costsOther operating expenses

10

20

30

40

50

0

2

4

6

8

10

12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12

2011 2012 2013 2014 '15 '16 '17 '18


0

2

4

6

8

10

12

14

12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12

2011 2012 2013 2014 '15 '16 '17 '18


0

1

2

3

4

5

6

12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12

2011 2012 2013 2014 '15 '16 '17 '18


20

2.4. Liquidity

2. Banking sector

21

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

22


(loans to deposits)

* Excluding 10% largest observations.



(%)

* Excluding 10% largest observations.



(%) (%)

* High-power money.


Household and corporate deposits to monetary

aggregates

Banks` FX-reserves to household and corporate FX-

deposits

LTD ratio Average monthly liquidity ratio

Average monthly narrow liquidity ratio Liquid assets

0

100

200

300

400

500

600

700

800

1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3

2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Deposits/H*Deposits/M1Deposits/M2Deposits/M3

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1

2011 2012 2013 2014 2015 2016 2017 '18

0123456789

10

1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3 8 1

'08 2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Range by banks*

Banking sectorCritical boundary

0

10

20

30

40

50

60

70

80

1 2 3 4 5 6 7 8 91011121 2 3 4 5 6 7 8 91011121 2 3 4 5 6 7 8 91011121 2 3

2015 2016 2017 2018

Liquid assets/total assets

Liquid assets/short-term liabilities

Core liquid assets/total assets

Core liquid assets/short-term liabilities

0

1

2

3

4

5

6

7

8

1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3 8 1

'08 2009 2010 2011 2012 2013 2014 2015 2016 2017 '18Range by banks*

Banking sectorCritical boundary

0

2

4

6

8

10

12

14

16

18

20

1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3

2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

23

2. Banking sector

2.5. Sensitivity to market risks

25

Chart 2.49.

(RSD bn) (%)


Quarterly breakdown of the sector's long and short FX

position (in EUR) and foreign exchange risk ratio

0

1

2

3

4

5

6

7

0

5

10

15

20

IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I

2011 2012 2013 2014 2015 2016 2017 '18

Long EUR Short EUR FX risk indicator

27

3.1. Insurance sector


29

1.000

2.000

3.000

4.000

5.000

6.000

7.000

Other1,2

30


(USD) (%)

*Тhe Latest Available Data *Тhe Latest Available Data

Source: sigma world insurance database Source: sigma world insurance database


(EUR m) (March 2018, %)

*Тhe Latest Available Data * Does not include reinsurance companies.

Source: CEA Statistics and National Bank of Serbia. Source: National Bank of Serbia.


(March 2018, %) (March 2018, %)



(%) (%)

* annual data * annual data


Total property insurance premium* Ownership structure of insurance companies*

Profitability indicators for life insurance companies*Profitability indicators for non-life insurance

companies*

Total premium per capita in 2016* Total premium to GDP in 2016*

Coverage structure of technical reserves in life

insurance

Coverage structure of technical reserves in non-life

insurance

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

Life Non-life

0

3

6

9

Life Non-life

0

200

400

600

800

2012 2013 2014 2015 2016

Serbia 24%

Slovenia 7%

Austria 30%

Italy 10%

Netherlands 25%

Other 4%

Republic of Serbia

Government securities

96,7%

Deposits with banks 2,4%

Real estate 0,2%

Other 1,2%

Republic of Serbia

Government securities

71,8%

Deposits with banks 12,2%

Real estate 6%

Other 10%

-4

-2

0

2

4

6

8

10

12

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Return on equity Return on assets

-5

0

5

10

15

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Return on equity Return on assets

31

Chart 3.9.

(%)


Combined insurance ratio

0102030405060708090

100110

I

08 09 10 11 12 13 14 15 16 17 2018

Loss ratio Expense ratio Limit

32

3.2. Voluntary pension funds sector


33

10

15

20

25

30

35

40

Republic of

34


(RSD bn) (index, 15. 11. 2006 = 1000) (RSD m)

* Voluntary pension funds.


Chart 3.12.

(March 2018, %)


Net assets growth and net contributions to VPF*Total VPF* net assets and index FONDex

VPF asset structure

1.000

1.300

1.600

1.900

2.200

2.500

2.800

0

5

10

15

20

25

30

35

40

6 10 2 6 10 2 6 10 2 6 10 2 6 10 2 6 10 2 6 10 2 6 10 2 6 10 2

2010 2011 2012 2013 2014 2015 2016 '17 '18

VPF net asset (lhs) FONDex (rhs)

-1.000

0

1.000

2.000

3.000

4.000

5.000

6.000

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 I'18

Net contributionsIncrease from investmentIncrease in total VPF assets

Republic of Serbia Т-

bonds 84.4%

Deposits 6.5%

Shares 8.7%

Other 0.4%

35


3.3. Leasing sector

37


(March 2018, %) (March 2018, %)

* Banks, VPF, RS, local government, other residents, nonresidents.


Investment structure by lessee Investment structure by leasing object

Companies 84.3%

Natural persons

3.5%

Enterpreneurs 4.6% Public

companies 4.1%

Farmers 2.7%

Other* 0.5%

Trucks, buses 41.9%

Cars 34.7%

Production machinery

3.1% Other 4.0%

Construction machinery

4.7%

Agricultural equipment

5.7%

Equipment for services

3.1%

Rail vehicles, vessels 0.1%

Commercial real estate

3.0%

39

4. Corporate sector

41

1.000

1.200

1.400

42


(index, 2017 = 100) (y-o-y growth rates, %)

* Seasonally adjusted data. * Adjusted for exchange rate movements.



(RSD bn) (%) (thousands) (RSD bn)

* FX loans to total loans. * End of period.


Industrial production index* Real growth of corporate loans*

Currency structure of bank claims on corporates Enforced collection

60

80

100

120

140

5 10 3 8 1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2

2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Mining

Manufacturing

Electricity, gas, steam, air-conditioning

-20

-15

-10

-5

0

5

10

15

20

25

5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1

2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Domestic loans Cross-border loans

Total corporate loans

55

60

65

70

75

80

85

90

0

200

400

600

800

1.000

1.200

1.400

I III I III I III I III I III I III I III I III I III I

2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Other currencies (lhs) CHF (lhs)

USD (lhs) EUR (lhs)

59

,3

61,3

6

4,3

6

6,6

68,9

7

0,2

68,1

6

3,0

6

4,6

6

2,7

6

2,2

6

2,3

5

8,9

59,5

6

0,7

4

5,9

39,7

4

4,7

5

0,8

4

3,7

48,3

52,2

5

3,7

54,0

55,2

56,0

5

4,2

5

3,2

5

2,6

51,6

5

0,5

5

0,0

5

0,7

5

2,7

5

4,0

53,1

5

4,2

0

100

200

300

400

0

20

40

60

80

I III I III I III I III I III I III I III I III I III I

2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Number of blocked accounts (lhs)*

Amount of money in blocked accounts (rhs)

43

5. Household sector

45

1.000

46


(index, 2016 = 100) (y-o-y growth rates, %)

* Seasonally adjusted data. * Adjusted for exchange rate movements.



(RSD bn) (%) (term and currency structure)

* Share of FX loans in total loans.



(y-o-y growth rates, pp) (y-o-y growth rates, pp)


Contributions to real growth of FX savings Contributions to growth of RSD savings

Consumer prices and net household earnings Household loans growth

Currency structure of of bank claims on households Structure of household savings

(%)

70

75

80

85

90

95

100

105

110

115

2 6 10 2 6 10 2 6 10 2 6 10 2 6 10 2 6 10 2 6 10 2 6 10 2

2011 2012 2013 2014 2015 2016 2017 '18Nominal net wages*Real net wages*CPI

-10

0

10

20

30

40

50

1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3

2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Nominal loan growth rate Real loan growth rate*

40

50

60

70

80

90

100

0

200

400

600

800

1.000

1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3

2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Other currencies (lhs) CHF (lhs)

EUR (lhs) RSD (lhs)

Share of FX loans (rhs)*

0

20

40

60

80

100

IIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I

20082009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Short-term FX savings Long-term FX savings

Short-term RSD savings Long-term RSD savings

-20

-10

0

10

20

30

40

3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3

2010 2011 2012 2013 2014 2015 2016 2017 '18Long-term FX savingsShort-term FX savingsTotal FX savings growth

-50

0

50

100

150

9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1

2010 2011 2012 2013 2014 2015 2016 2017 '18Long-term RSD savingsShort-term RSD savingsTotal RSD savings growth

Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q1

2010 2011 2012 2013 2014 2015 2016 2017 2018

Total bank claims on households

RSD bn 571,2 601,7 652,7 673,7 724,6 759,1 838,7 904,2 924,1

EUR m 5.414,3 5.750,5 5.739,5 5.876,2 5.990,6 6.240,9 6.802,8 7.589,7 7.806,0

FX deposits to FX bank claims1)

72,4 67,4 65,0 62,1 59,0 57,2 52,8 48,3 48,1

FX to total deposits1)

92,4 90,7 92,1 89,4 88,7 87,1 85,1 84,2 84,6

FX deposits to FX loans1)

177,2 191,2 214,7 223,3 233,4 233,9 240,9 246,2 246,4

Short-term bank claims to total claims 13,2 12,3 14,3 15,3 9,1 6,2 6,8 5,9 5,8

LTV ratio2) 65,4 65,6 65,7 65,9 65,8 68,5 70,2 70,2 70,7

Av erage loan per resident

RSD thousand 76,0 81,0 88,2 91,4 100,4 105,9 118,5 128,4 130,0

EUR 720,6 773,9 775,7 797,3 830,3 870,4 959,9 1.078,0 1.098,1

Av erage loan amount

RSD thousand 427,6 439,6 460,4 489,9 511,1 472,2 488,7 486,7 466,5

EUR 4.052,8 4.201,4 4.049,0 4.273,1 4.225,3 3.882,5 3.957,6 4.085,1 3.940,6

Av erage loan per user

RSD thousand 509,0 530,9 570,1 612,0 644,7 614,6 641,0 650,8 641,6

EUR 4.824,9 5.073,9 5.012,9 5.338,8 5.329,8 5.053,1 5.191,4 5.462,3 5.419,5

1) FX loans and deposits include FX-indexed loans and deposits.

2) For loans insured with National Mortgage Insurance Corporation. (last data december 2017.)

Data download and use allowed. Due to technical reasons, NBS makes no warranties as to the accuracy or completeness of the

information.

Source: National Bank of Serbia, Association of Serbian Banks, National Mortgage Insurance Corporation and Statistical Office of the Republic of Serbia.

47

Table 5.1.

(%, unless indicated otherwise)

Household sector performance indicators

Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q1

2010 2011 2012 2013 2014 2015 2016 2017 2018

Total bank claims on households

RSD bn 571,2 601,7 652,7 673,7 724,6 759,1 838,7 904,2 924,1

EUR m 5.414,3 5.750,5 5.739,5 5.876,2 5.990,6 6.240,9 6.802,8 7.589,7 7.806,0

FX deposits to FX bank claims1)

72,4 67,4 65,0 62,1 59,0 57,2 52,8 48,3 48,1

FX to total deposits1)

92,4 90,7 92,1 89,4 88,7 87,1 85,1 84,2 84,6

FX deposits to FX loans1)

177,2 191,2 214,7 223,3 233,4 233,9 240,9 246,2 246,4

Short-term bank claims to total claims 13,2 12,3 14,3 15,3 9,1 6,2 6,8 5,9 5,8

LTV ratio2) 65,4 65,6 65,7 65,9 65,8 68,5 70,2 70,2 70,7

Av erage loan per resident

RSD thousand 76,0 81,0 88,2 91,4 100,4 105,9 118,5 128,4 130,0

EUR 720,6 773,9 775,7 797,3 830,3 870,4 959,9 1.078,0 1.098,1

Av erage loan amount

RSD thousand 427,6 439,6 460,4 489,9 511,1 472,2 488,7 486,7 466,5

EUR 4.052,8 4.201,4 4.049,0 4.273,1 4.225,3 3.882,5 3.957,6 4.085,1 3.940,6

Av erage loan per user

RSD thousand 509,0 530,9 570,1 612,0 644,7 614,6 641,0 650,8 641,6

EUR 4.824,9 5.073,9 5.012,9 5.338,8 5.329,8 5.053,1 5.191,4 5.462,3 5.419,5

1) FX loans and deposits include FX-indexed loans and deposits.

2) For loans insured with National Mortgage Insurance Corporation. (last data december 2017.)

Data download and use allowed. Due to technical reasons, NBS makes no warranties as to the accuracy or completeness of the

information.

Source: National Bank of Serbia, Association of Serbian Banks, National Mortgage Insurance Corporation and Statistical Office of the Republic of Serbia.

48

6.1. International macroeconomic environment


49


* Bosnia and Herzegovina.

Source: Standard & Poor's. Source: Standard & Poor's.


(bp) (bp)

* CDS spreads on five-year dollar bonds. * CDS spreads on five-year dollar bonds.

Source: Bloomberg. Source: Bloomberg.


(%) (%)

* USD-denominated. * 10 years maturity, EUR-denominated, except RS bonds.



(%) (bp)

* 10 years maturity, euro-denominated.

Source: Bloomberg. Source: J.P. Morgan.

CDS spread on Greek bonds*

Regional sovereign credit ratings dynamics Sovereign credit ratings dynamics of home countries

of banks whose subsidiaries operate in Serbia

CDS spreads on bonds of home countries of parent

banks whose subsidiaries operate in Serbia*

Emerging Market Bond Index: Serbia and EMBI Global

Sovereign bond yields: Serbia and CEE region*Sovereign bond yields: Serbia and home countries of

parent banks whose subsidiaries operate in Serbia*

Greek bond yield*

6

8

10

12

14

16

18

20

6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3

2009 2010 2011 2012 2013 2014 2015 2016 2017 '18Serbia Bulgaria Croatia

Hungary Romania Montenegro

FYROM Bosnia* Slovenia

0

2

4

6

8

10

12

14

16

18

20

6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3

2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Serbia Austria Italy

Greece France

0

100

200

300

400

500

600

Austria Italy France

0

5.000

10.000

15.000

20.000

25.000

30.000

0

2

4

6

8

10

Serbia Hungary Croatia

Turkey Poland

0

2

4

6

8

10

12

14

Serbia Italy France Austria

0

5

10

15

20

25

30

35

40

0

200

400

600

800

1.000

1.200

1.400

8 1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3

'08 2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

EMBI Serbia EMBI Global

1.000

1.200

1.400

10.000

51


(bp) (%)

Source: J.P. Morgan. Source: ECB, Bloomberg.


(3M EURIBOR/EONIA spread, monthly averages, bp) (y-o-y rates)

Source: Bloomberg. Source: ECB.


(bp) (bp)

* CDS spread on 5 year bonds. * CDS spread on 5 year bonds.



(bp) (bp)

* CDS spread on 5 year bonds. * CDS spread on 5 year bonds.


Emerging Market Bond Index: Serbia and CEE

countriesECB interest rates and EONIA

Risk premium on the interbank money marketInflation in the eurozone

CDS spreads on bonds issued by Italian parent banks

whose subsidiaries operate in Serbia*

CDS spreads on bonds issued by Greek parent banks

whose subsidiaries operate in Serbia*

CDS spreads on bonds issued by Austrian parent


CDS spreads on bonds issued by French parent


0

200

400

600

800

1.000

1.200

1.400

8 1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3

'08 2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

Serbia Poland Turkey

Croatia Hungary

-2

0

2

4

6

EONIA ECB key policy rate

Interest rate on lending facility Interest rate on deposit facility

0

20

40

60

80

100

120

140

3 9 3 9 3 9 3 9 3 9 3 9 3 9 3 9 3 9 3 9 3 9 3

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017'18

-1

-1

0

1

1

2

2

3

3

4

1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3

2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

0

2.000

4.000

6.000

8.000

10.000

EFG Eurobank Ergasias

0

100

200

300

400

500

Erste Group Bank AG Raiffeisen Bank International AG

0

50

100

150

200

250

300

350

400

450

Credit Agricole S.A. Societe Generale

0

100

200

300

400

500

600

700

Intesa Sanpaolo S.p.A. UniCredit S.p.A.

52


(index, 1. 6. 2007 = 100) (index, 1. 6. 2007 = 100)



(index, 1. 6. 2007 = 100) (index, 1. 6. 2007 = 100)



(%)

* Share in net assets of the banking sector. *Latest data available.

Source: National Bank of Serbia. Source: Bank for International Settlements.

(index, December 2006 = 100)

Stock price dynamics of Italian parent banks whose

subsidiaries operate in Serbia

Stock price dynamics of Austrian parent banks

whose subsidiaries operate in Serbia

Stock price dynamics of French parent banks whose


Ownership structure of banks in Serbia*

BIS member banks' gross exposure towards

emerging markets

Stock price dynamics of Greek parent banks whose


0

20

40

60

80

100

120

EFG Eurobank Ergasias

0

20

40

60

80

100

120

Intesa Sanpaolo S.p.A. UniCredit S.p.A.

0

20

40

60

80

100

120

Erste Group Bank AG Raiffeisen Bank International

0

20

40

60

80

100

120

Societe Generale Credit Agricole S.A.

0

20

40

60

80

100

IIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I

'08 2009 2010 2011 2012 2013 2014 2015 2016 2017"18

Greek banks Italian banksFrench banks Austrian banksDomestic privately owned Domestic publicly ownedOther banks

0

100

200

300

400

I II IIIIVI II IIIIVI II IIIIVI II IIIIVI II IIIIVI II IIIIVI II IIIIVI II IIIIVI II IIIIVI II IIIIVI II IIIIV*

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Serbia Hungary RomaniaBulgaria Croatia Czech Rep.Poland Turkey

53


6.2. Domestic macroeconomic environment

55


(y-o-y growth rates, pp) (y-o-y growth rates, pp)

* NBS estimate. * NBS estimate.



(index, 2016 = 100) (%)

* According to the Labour Force Survey. **Latest available data.

Source: National Bank of Serbia. Source: Statistical Office of the Republic of Serbia.


(y-o-y growth rate, %) (y-o-y growth rates, pp)



(%) (eop, %)

Source: National Bank of Serbia. Source: Bloomberg.

NBS key policy rate and BEONIA 3M money-market interest rates

Industrial production index

Contributions to real GDP growth by production-side

components

Contributions to real GDP growth by expenditure-side

components

Contributions to CPI changes

Unemployment rate*

Consumer price index

-6

-4

-2

0

2

4

6

8

10

I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIVI*

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017'18

Contribution of nontradable sectorsContribution of tradable sectorsReal GDP growth

-20

-16

-12

-8

-4

0

4

8

12

16

20

I IIIIIIVI IIIIIIV I IIIIIIVI IIIIIIV I IIIIIIV I IIIIIIVI IIIIIIV I IIIIIIVI IIIIIIV I IIIIIIVI*

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017'18

Consumption Investment

Government Net export

Real GDP growth

80

85

90

95

100

105

110

7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3

2011 2012 2013 2014 2015 2016 2017 '18

0

5

10

15

20

25

30

II IV2010

II IV2011

II IV2012

II IV2013

I2014

II III2014

IV I2015

II III2015

IV I2016

II III2016

IV I2017

II III2017

IV**

-1

1

3

5

7

9

11

13

15

17

7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3

2011 2012 2013 2014 2015 2016 2017 '18

CPI Inflation target Target bound

-4

-2

0

2

4

6

8

10

12

14

16

7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3

2011 2012 2013 2014 2015 2016 2017 '18

Food Other goods and services CPI

0

5

10

15

20

25

BEONIA Key policy rate

Interest rate on credit facility Interest rate on deposit facility

-2

-1

-1

0

1

1

2

2

3

1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3

2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

3M LIBOR USD 3M LIBOR CHF 3M EURIBOR

57


(monthly averages, %) (index, 31.12.2010 = 100)

Source: National Bank of Serbia. Source: National Bank of Serbia and other central banks.


(index, December 2007 = 100) (EUR m) (EUR/RSD)



(standard deviation of daily % changes in RSD) (daily averages, in paras)



(EUR bn) (% of GDP) (EUR bn) (% of GDP)

** Ratio of 4Q moving sums. ** Ratio of 4Q moving sums.

Source: Statistical Office of the Republic of Serbia and NBS. Source: Statistical Office of the Republic of Serbia and NBS.

* Starting from 2007 data on exports and imports of goods and services are

shown in accordance with BPM6. Data for 2005 and 2006 are shown

according to BPM5.

Dynamics of the RSD exchange rate against EUR and

NBS interventions on the interbank FX market

Bid-ask spread on the interbank FX market

Current account deficit* Net foreign direct investments*

* Starting from 2007 data on exports and imports of goods and services are

shown in accordance with BPM6. Data for 2005 and 2006 are shown

according to BPM5.

Volatility of the exchange rate

Exchange rate dynamics of national currencies

against the euroBELIBOR interest rates

Dynamics of the RSD exchange rate against EUR, CHF

and USD

23456789

1011121314

7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3

2010 2011 2012 2013 2014 2015 2016 2017 '18

BELIBORTN BELIBORSN BELIBOR1W

BELIBOR2W BELIBOR1M Key policy rate

40

50

60

70

80

90

100

110

120

Serbia Romania Poland

Hungary Turkey

0

20

40

60

80

100

120

3 8 1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017'18

RSD/CHF RSD/USD RSD/EUR

85

90

95

100

105

110

115

120

125

-400

-300

-200

-100

0

100

200

300

400

500

11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3

20112011 2012 2013 2014 2015 2016 2017 '18

NBS interventions - sold (lhs)NBS interventions - bought (lhs)

Average exchange rate (rhs)

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

3 8 1 2 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017'18

0

20

40

60

80

100

120

0

3

6

9

12

15

18

21

24

0

2

4

6

8EUR bn (lhs) % of GDP** (rhs)

0

5

10

15

20

0

1

2

3

4

5EUR bn (lhs) % of GDP** (rhs)

58

6.3. FX reserves adequacy indicators


59


(mos of imports) (%)

* Latest data available



(%) (%)


Coverage of high-power (H) money by FX reserves Coverage of M1 monetary aggregate by FX reserves

Coverage of imports by FX reserves Coverage of short-term external debt at remaining

maturity by FX reserves

0

2

4

6

8

10

12

IV IV IV IV IV IV IV IV IV IV I

´08 ´09 ´10 ´11 ´12 ´13 ´14 ´15 ´16 ´17 ´18

Gross FX reserves Net FX reserves

Critical boundary

0

100

200

300

400

IV IV IV IV IV IV IV IV IV IV*

´08 ´09 ´10 ´11 ´12 ´13 ´14 ´15 ´16 ´17


Critical boundary

0

50

100

150

200

250


´08 ´09 ´10 ´11 ´12 ´13 ´14 ´15 ´16 ´17 ´18


0

100

200

300

400

500


´08 ´09 ´10 ´11 ´12 ´13 ´14 ´15 ´16 ´17 ´18


61

6.4. Indebtedness of the Republic of Serbia


63


(% of GDP) (% of GDP) (% of GDP)

*Ratio of 12m moving sums. *Ratio of 4Q moving sums.

Source: NBS according to MoF data. Source: NBS according to MoF data.


(% of GDP) (EUR bn) (%)

Source: Ministry of Finance of the Republic of Serbia. Source: Ministry of Finance of the Republic of Serbia.


(%) (%)

from Dec.2013 53w T-bills are included in Short-term debt



(%) (%)


Public debt by remaining maturity Internal and external component of public debt

Public debt by currency Public debt by original maturity

Public debt dynamics Public debt to GDP

Fiscal result* Public revenues and expenditures*

-8

-7

-6

-5

-4

-3

-2

-1

0

1

2

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1

2009 2010 2011 2012 2013 2014 2015 2016 2017 "18

-8

-7

-6

-5

-4

-3

-2

-1

0

1

2

0

10

20

30

40

50

I III I III I III I III I III I III I III I III I III I III I III I

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017"18

Public revenues (lhs) Public expenditures (lhs)

Fiscal result (rhs)

0

10

20

30

40

50

60

70

80

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

2012 2013 2014 2015 2016 2017 "18

0

20

40

60

80

100


2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017"18

Public debt denominated in RSD

Public debt denominated in other currencies

0

20

40

60

80

100

3 6 9 12 3 6 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3

2012 2013 2014 2015 2016 2017 "18

Long-term debt Short-term debt

0

10

20

30

40

50

60

70

80

90

100

3 6 9 12 3 6 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3

2012 2013 2014 2015 2016 2017 "18

Long-term debt Short-term debt

0

10

20

30

40

50

60

70

80

90

100


2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017"18

External debt Internal debt

100

0

5

10

15

20

25

30

0

10

20

30

40

50

60

70

80


2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 "18

Public debt to GDP ratio (lhs) Public debt level (rhs)

65

Chart 6.51.

(%) (EUR bn)

Source: Ministry of Finance of the Republic of Serbia.

Government securities portfolio holder structure

(primary market data)

0

2

4

6

8

10

0

20

40

60

80

100

3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3

2011 2012 2013 2014 2015 2016 2017 "18

Non-residents on foreign capital market (lhs)

Non-residents on domestic capital market (lhs)

Residents on domestic capital market (lhs)

GovSec issued in FCY (rhs)

GovSec issued in RSD (rhs)

66


67

100

100

200

300

400

500

600

700

800

68


(primary auction) (RSD bn) (%)

(RSD bn)



(monthly averages, %) (auctions, weighted monthly averages, %)



(nominal value)

(by maturity, averages) (RSD bn)



(RSD bn) (%) (nominal values)

(EUR mn)

* Custodian banks, insurance co, VPF, natural pers. and other legal ent.


Interest rates on treasury bills, primary market

RSD government bonds investors structureEuro-denominated government bonds, outstanding

stock

Interest rates on zero coupon RSD government

securities

Foreign investors' share at RSD government bond

auctions

RSD government securities, outstanding stock

Primary market demand for RSD government bondsRealisation rate and foreign investors' share in

auctions of RSD government bonds

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

0

20

40

60

80

100

11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3

2011 2012 2013 2014 2015 2016 2017 '18

Market value of sold bonds (lhs) Bid-to-cover ratio (rhs)

0

25

50

75

100

0

40

80

120

160

200

240

280

320

360

400

440

11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3

2011 2012 2013 2014 2015 2016 2017 '18

Total nominal value for sale (lhs)

Realization rate (rhs)

Foreign investors' share (rhs)

0

2

4

6

8

10

12

14

16

7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3

2010 2011 2012 2013 2014 2015 2016 2017 '18

3M treasury bills 6M treasury bills

Key policy rate BELIBOR 3M

BELIBOR 6M

0

2

4

6

8

10

12

14

16

7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3

2010 2011 2012 2013 2014 2015 2016 2017 '18

3М 6М 12M

18M 24M Total

0

20

40

60

80

100

1Y 18M 2Y 3Y 5Y 7Y 10Y

2010 2011 2012 2013 2014 2015

2016 2017 I 2017 II 2017 III 2017 IV 2018 I

0

100

200

300

400

500

600

700

800

IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I

2009 2010 2011 2012 2013 2014 2015 2016 2017 '18

3M 6M 1Y 18M 2Y 3Y 5Y 7Y 10Y

0

20

40

60

80

100

0

100

200

300

400

500

600

700

800

11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3

2011 2012 2013 2014 2015 2016 2017 '18Foreign investors (lhs) Domestic banks (lhs)Others (lhs)* Foreign investors (rhs)Domestic banks (rhs)

0

500

1.000

1.500

2.000

2.500

3.000

3.500

I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I

2011 2012 2013 2014 2015 2016 2017 '18

1Y 18M 2Y 3Y 5Y 10Y 15Y

1.000

1.500

2.000

69


(RSD bn) (%)




Source: Belgrade Stock Exchange and National Bank of Serbia. Source: Belgrade Stock Exchange.


(index, 15. 11. 2007 = 100) (index, average 2002-2010 = 100)

Source: Bloomberg. Source: National Mortgage Insurance Corporation.


(index, 2016 = 100) (in number of years)

*Latest available data.

Source: Statistical Office of the Republic of Serbia. Source: NBS, base on SO and NMIC data.

Belgrade Stock Exchange market capitalisation Belgrade Stock Exchange equity market turnover

RSD government bonds, annual turnover

Stock markets' indices

Indices of the number of newly issued building

permits

Real estate index DOMex

Price-to-income

Maturity of RSD government securities until 2028

(securities issued up to 31.03.2018, nominal value of the stock

outstanding, RSD bn)

0

10

20

30

40

50

60

70

80

0

10

20

30

40

50

60

70

80

90

7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3 7 11 3

2011 2012 2013 2014 2015 2016 2017 '18

Turnover (lhs) Turnover ratio (rhs)

0

20

40

60

80

100

120

140

4 5 6 7 11 1 2 5 6 8 10 3 4 9 10 3 6 9 2 1 7 10 2

2018 2019 2020 2021 '22 '23 '24'28

0

20

40

60

80

0

500

1.000

1.500

2.000

Bonds (lhs)

Shares (lhs)

Market capitalisation to GDP (rhs)

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

0

3

6

9

12

15

6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3

2012 2013 2014 2015 2016 2017 '18

Monthly block trades (lhs)

Monthly turnover without block trades (lhs)

Monthly turnover ratio (rhs)

70

80

90

100

110

120

130

I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017'18

Serbia

Belgrade region (Belgrade)

Vojvodina region (Novi Sad)

South and East Serbiа region (Nis) Šumadija and Western Serbia region (Kragujevac)

20

40

60

80

100

120

140

160

180

200

3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3

2015 2016 2017 2018

Total Residential Other buildings

0

50

100

150

200

250

BELEX15 CROBEX BUX

S&P500 DAX

5

7

9

11

13

15

II2005

IV II2006

IV II2007

IV II2008

IV II2009

IV II2010

IV II2011

IV II2012

IV II2013

IV II2014

IV II2015

IV II2016

IV II2017

IV*

Housing availability indicator Average value

70

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

71

Definitions

Chart 1.1. Greater distance from the center of the "net" indicates greater risk. Standardised values of key financial

soundness indicators are shown: CAR − capital adequacy ratio (regulatory capital to risk-weighted assets), C/A −

capital to assets, NPL − gross non-performing loans to total gross loans, Provisions/NPL − total provisions to

gross NPL, ROA − return on assets, ROE − return on equity. The region encompasses the following countries:

Bosnia and Herzegovina, Bulgaria, Latvia, Lithuania, Hungary, FYRM, Poland, Romania, Turkey, Croatia and

Montenegro. Indicators that refer to the region were obtained as non-weighted averages of corresponding

indicators of the countries listed above.

Chart 1.2. Increasing distance from the center indicates an increase in the specific risk. Increasing area indicates an

increase in the overall macroeconomic vulnerability of the country.

Chart 2.1. The capital adequacy ratio is the ratio between regulatory capital and risk-weighted assets. Regulatory capital

comprises Tier 1 and Tier 2 regulatory capital. Risk-weighted assets are obtained by adding up assets weighted

by credit risk and the capital requirements for market and operational risk multiplied by the inverse of the required

capital adequacy ratio.

Chart 2.2. Tier 1 regulatory capital comprises shareholders' equity (excluding preference shares), reserves and net gain net

of deductables. In order to be recognised as Tier 1 capital, an element should fulfill certain conditions, for instance

not having a maturity, ability to asporb losses, etc.

Chart 2.7. Indicators of leverage show the extent to which banks finance their assets from their own funds.

Chart 2.8. Foreign currency loans refer to foreign currency denominated loans and domestic currency denominated loans

that are indexed in foreign currency.

Chart 2.9. Foreign currency deposits refer to foreign currency denominated deposits and domestic currency denominated

deposits that are indexed in foreign currency.

Chart 2.13. Non-performing loans represent the stock of overall remaining debt (including the amount past due) with payment

overdue for longer than 90 days, or with principal or interest payments that are past due for 90 days or more; if at

least 90 days of interest payments have been capitalised, refinanced or delayed; if the payment of loan is not late,

but the bank has reasons to doubt that payment will be made in full.

Chart 2.15. Balance sheet provisions are made for the part of a loan that a bank considers unlikely to be collected. Total

regulatory provisions are obtained as a weighted sum of loans in categories A,B,C,D and E (as defined in further

detail in the Decision оn the Classification of Bank Balance Sheet Assets and Off-balance Sheet Items).

Chart 2.16. The main criteria for classification in categories A, B, C, D and E is regularity of client's payments. Categories D

and E represent assets with the lowest quality, that are past due for more than 90 days.

Chart 2.25. Subordinated debt is the last to be paid in case of default, which allows it to be considered part of the capital.

Chart 2.27. Return on assets (return on equity) is the ratio between profit before taxation made during the period and average

assets (equities) during that period.

Chart 2.30. Net operating income (operating gain) is profit from bank's main activity (it excludes extraordinary gains and

losses). As domestic banking sector's activity is mainly related to traditional jobs involving loans and deposits and

not to investment banking, the major element of the operating gain is net interest margin, that is the difference

between interest incomes and expenditures. Income from trade in securities is negligible.

Chart 2.34. The Cost-to-income ratio is the part of operating income that is used to cover operating expenses of the bank.

Chart 2.42. The LtD ratio (loans to deposits) indicates the ability of the bank to finance its loans by deposits. The value of this

indicator greater than 1 could be seen as the lack of bank's ability to react to shocks.

Chart 2.43. The liquidity ratio is the ratio between liquid assets and liquid liabilities (a vista liabilities and liabilities with maturity

shorter than one month). According to the Decision on Risk Management by Banks, the average monthly liquidity

ratio should not be lower than 1, the liquidity ratio should not be lower than 0.9 longer than 3 days, and it should

never be lower than 0.8.

Chart 2.44. The liquidity ratio is the ratio between first-order liquid assets and liquid liabilities. According to the Decision on

Risk Management by Banks, the average monthly narrow liquidity ratio should not be lower than 0.7, the narrow

liquidity ratio should not be lower than 0.6 longer than 3 days, and it should never be lower than 0.5.

Chart 2.45. Liquid assets are the sum of bank's liquid first and second-degree receivables, as on the last day of the month

(defined in the Decision on Risk Management by Banks). More restrictive definition defines liquid assets as liquid

first-degree receivables on the last day of the month.

Chart 2.46. High-power money consists of cash in circulation and banks' deposits in dinars with the National Bank of Serbia.

Chart 2.47. As part of the Vienna Initiative, some regulatory concessions were made to foreign banks that agreed to keep

their exposures to the Serbian market at the agreed level.

Chart 2.49. The net open FX position is the sum of maximum of absolute value of the total long position and absolute value of

the total short position in foreign currency, plus the absolute value of position in gold. The total long (total short)

foreign currency position of the banking sector is the sum of its net long (net short) positions by foreign

currencies.

Chart 2.50. Key indicators of the exposure to the foreign currency risk are the net open FX position to the regulatory capital

ratio and the net open FX position to Tier 1 ratio, as a more conservative measure of risk. The Decision on Capital

Adequacy of Banks requires that the ratio of the net open FX position to regulatory capital must be at all times

below 20%.

1. Financial soundness indicators

2. Banking sector

72

Charts 3.7. and 3.8. Profitability indicators are avaliable in annual frequency.

Chart 3.9. The combined indicator is sum of the two ratios shown on chart. The value greater than 100% means that

insurance companies mainly depend on the result of their investement activities in financial markets, instead on

results of their basic activities.

Chart 3.10. The fondex daily value is obtained by multiplying the value of index for the previous day by the weighted average

of chain index values of investement units for every fund.

Chart 6.3. Credit default swap (CDS) is a financial derivative designed to hedge its holder against the default of the issuer of

an underlying bond. CDS spread is a price the owner of CDS has to pay for the provided protection. An increase

in this insurance premium is an indicator of the increase in the credit risk of an underlying bond.

Chart 6.8. The emerging market bond index (EMBI) is the difference between the premium investors require for holding

public debt of the market considered and the premium required for holding US Treasury bonds.

Chart 6.39. According to the IMF definition, FX reserves consist of those external assets that are readily available to and

controlled by monetary authorities for direct financing of payments imbalances, for indirectly regulating the

magnitude of such imbalances through intervention in exchange markets to affect the currency exchange rate,

and/or for other purposes. Gross FX reserves consist of foreign securities, deposits on accounts abroad, effective

foreign money, gold, and special drawing rights. Net FX reserves are gross FX reserves minus banks' deposits

and special drawing rights related to gross FX reserves.

Chart 6.45. According to the Law on Public Debt, public debt of the Republic of Serbia is defined as debt of the Republic,

based on agreements concluded by the Republic; debt of the Republic based on issuing securities; debt of the

Republic based on contracts/agreements according to which obligations of the Republic, pursuant to previously

concluded agreements, have been rescheduled; debt of the Republic, based on the guarantee issued by the

Republic and/or based on the counter-guarantee issued by the Republic; debt of local government and legal

entities for which the Republic has issued guarantees.This Law intorduces the upper limit for the level of public

debt at 45% of GDP.

Chart 7.1. The bid-to-cover ratio is defined as the ratio between the nominal value of total submitted bids and the nominal

value of sold securities.

Chart 7.9. The annual turnover ratio is defined as the ratio between the extent of secondary market trading and the mean of

the stock of securities in the beginning and in the end of period.

Chart 7.16. The availability of an average housing unit to an average household in Republic of Serbia measured by the price-

to-income ratio, calculated as the ratio of the price of a 60m2 apartment to the average disposable income of an

average household in Republic of Serbia


6. International macroeconomic environment


73

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