27/12/2024

NBS results in 2024

We achieved a key strategic objective – investment-grade rating for Serbia.

  • Inflation retreated within target bounds (3±1.5%) in May this year and has remained there.
  • In 2024 as well, we preserved the relative stability of the dinar against the euro:
    • the dinar gained 0.2% on the euro in nominal terms, and
    • the NBS bought EUR 2.5 billion net in the IFEM (ending with 25 December).
  • The year 2024 is the seventh of the past eight years (from 2017 onwards) in which the NBS was a net FX buyer – in the total amount of EUR 11.6 billion (ending with 25 December).
  • Gross FX reserves are at their all-time high of EUR 29 billion.
  • We continued to raise the share of gold in FX reserves in 2024 – by a total of 8.1 tonnes, to the record-high level of 48 tonnes.
  • As the price of gold in the global market went up, the value of gold reserves reached a new record high of EUR 3.9 billion or around 13% of FX reserves.
  • In 2024, dinar savings posted record-high nominal growth by over RSD 49 billion (35%), to over RSD 187 billion.
  • Interest rates on new dinar household loans decreased by over 200 basis points, and rates on new dinar corporate loans – by over 50 basis points (ending with November).
  • We adopted measures under the NBS’s remit to support the implementation of the government youth housing loan programme.
  • We decided to temporarily cap interest rates on loan contracts concluded with natural persons, as a reflection of our firm commitment to protecting the interests of financial service consumers; this matter will also be regulated by law.  
  • We not only returned inflation within target bounds, but also posted high GDP growth – among the highest in Europe. In cumulative terms, GDP growth will exceed the pre-pandemic level by over 18%.
  • FDI inflows climbed to a new record-high of over EUR 5 billion.
  • The IMF approved to Serbia a three-year non-financial advisory Policy Coordination Instrument intended for countries pursuing sound economies policies.

Serbia became an investment-grade country for the first time in its history.

  • Standard & Poor’s raised Serbia’s credit rating to investment grade.
  • The other two leading rating agencies, Fitch and Мооdy’s, assess Serbia’s outlook as positive.
  • The award of investment-grade rating reflects the country’s favourable macroeconomic indicators and the economy’s increased resilience to external shocks. At the same time, this is a confirmation of the responsible economic policy pursued in prior years.
  • This decision has only confirmed what investors have demonstrated for years now through high FDIs and the valuation of Serbia’s securities at levels typical for some investment-grade economies.

Inflation is within the NBS target band

  • Inflation has been within the target band (3±1.5%) since May this year, consistent with the NBS’s projections.
  • Inflation’s return to the target band was supported by the NBS’s monetary policy measures, fall in inflation expectations and the easing of global cost-push pressures.
  • According to our projections, inflation will continue to move within these bounds in the medium term as well.
  • For over ten years, average inflation in Serbia has been at the level of inflation in Central European countries, whereas previously it was 5 percentage points higher.

Anchored short- and medium-term inflation expectations

  • Medium-term inflation expectations of the financial sector have been anchored within the target band for quite a while, and in the course of 2024, one-year-ahead expectations were also within the target bounds.
  • Anchored inflation expectations testify to market agents’ confidence in monetary policy measures and the credibility of the NBS.

We maintained relative stability of the dinar exchange rate against the euro

  • We maintained the relative stability of the dinar exchange rate in 2024 as well, with the dinar strengthening nominally against the euro by 0.2%.
  • Responding to continued intensive pressures on FX supply side, in order to prevent the dinar’s excessive appreciation against the euro, and using its FX market interventions, the NBS bought EUR 2.5 billion net (ending with 25 December).
  • The year 2024 is the seventh in the past eight years (since 2017) which the NBS ended as net FX buyer – in total amount of EUR 11.6 billion (ending with 25 December).

FX and gold reserves post new records

  • At EUR 29 billion, gross FX reserves are at their historical highs.
  • In 2024, gross FX reserves gained EUR 4.1 billion, mostly via the healthiest means –  NBS’s net purchase of FX for dinars in the local interbank FX market.
  • We continued to increase gold in FX reserves in 2024 – by 8.1 tonnes, by purchasing 5 tonnes of gold in the international market and 3.1 tonnes from domestic production.  
  • Higher quantity, together with the rise in global gold prices, boosted the value of gold reserves to a new record of EUR 3.9 billion, i.e. around 13% of total FX reserves.

New record increase in dinar savings

  • In 2024, dinar savings recorded the strongest nominal annual growth to date (since 2001, when data monitoring began).
  • Going up by RSD 49 billion (or 35%), dinar savings reached RSD 187 billion in 2024.

More favourable dinar financing and lending growth  

  • In 2024, we reduced the key policy rate by a total of 75 basis points, to 5.75%.
  • On that account, interest rates on new dinar household loans were lowered by over 200 basis points, аnd on new dinar corporate loans by over 50 basis points (ending with November).

GDP growth in 2024 is one of the highest in Europe

  • Sound and well-coordinated policies both ushered in inflation within the target bounds and propelled high economic growth.
  • With the projected GDP growth of 3.8%, Serbia will rank among the top performers in Europe in 2024.  
  • In cumulative terms, GDP will exceed the pre-pandemic level by over 18%.
  • A significant impetus to growth comes from private consumption, as a result of employment and wage growth, as well as from private and government investment.

New record inflow of FDI

  • This year we are looking at a new record FDI inflow of over EUR 5 billion.
  • FDIs kept geographical and project dispersion, propelling our economy’s productivity, employment and competitiveness growth, as evidenced by the following data:
    • Total goods and services exports in 2024, according to our estimate, will surpass EUR 43 billion, with a considerable impetus from manufacturing exports which stayed resilient in the face of low external demand.
    • Unemployment rate for Serbia dropped further in 2024, to its lowest level of 8.1% (data for the third quarter of 2024).

The IMF approved a new three-year non-financial instrument to Serbia

  • In 2024, reviews of Serbia’s performance under the two-year standby arrangement (SBA), concluded with the IMF in December 2022, were successfully completed, with the IMF stating that Serbia recorded impressive results.
  • Owing to excellent results and continuously stable economic indicators, the SBA was treated as precautionary ever since the second review (December 2023) and the funds made available have not been used.
  • In December 2024, the IMF approved to Serbia for the third time a non-financial advisory Policy Coordination Instrument, intended for countries with robust economic policies. Such decision shows that the IMF expects the continuity of sound economic policies in the medium run as well.   
  • The IMF Managing Director, Ms Kristalina Georgieva commended Serbia’s strong progress in the prior period, saying that Serbia is a bright spot in Europe.   

We maintained financial stability and facilitated loan repayment

  • In 2024, we maintained:
    • high capital adequacy of the banking sector (capital adequacy ratio of almost 22%),
    • favourable capital structure, with CET 1 capital accounting for around 92%,
    • good liquidity of the banking sector, with all relevant indicators twice higher than the regulatory minimums.
  • The quality of banking sector portfolio improved – the share of non-performing loans is at its historical low of 2.69%.
  • The NBS adopted regulations under its remit to facilitate the implementation of the government youth housing loan programme.
  • The measures temporarily capping housing loan interest rates produced excellent results. Over 13,400 housing loans worth almost EUR 900 million were approved and the share of non-performing housing loans decreased further, to 1.43% in November 2024.
  • More than 5,200 natural person borrowers used RSD 4.5 billion worth of repayment facility to reschedule their cash, consumer and similar loans at repayment terms three years beyond the regular regime, whereby we helped reduce the burden on their budgets.
  • Loans worth RSD 5.57 billion were rescheduled to registered agricultural holdings and entities buying and cold storing fruit.
  • A temporary measure of approving consumer loans of up to RSD 90,000 at under-two-year repayment term to natural persons remained in force in 2024, allowing for a quick, efficient and simple credit procedure.
  • All relevant parameters in the insurance market increased:
    • In the first three quarters of 2024, capital increased by 6.4%, balance sheet total by 8.6% (to RSD 417.1 billion), technical provisions by 8%, and total insurance premium by 14.7% y-o-y (to RSD 132.6 billion).
    • Relative to ten years ago – capital, total assets, technical provisions and total premium have more than doubled, resulting in a generally positive trend of per capita premium and the share of insurance premium in GDP.  

Protection and new rights of financial service consumers

  • By 16 December 2024, the NBS resolved 2,053 consumer complaints, the bulk of which relating to banks (63.6%). Of the 1,305 resolved consumer complaints against banks, 41.5% were founded.
  • The financial effect for consumers arising from complaint procedures in that period was RSD 82 million, while that arising from mediation procedures was RSD 1.2 million.
  • Supervision procedures also resulted in significant material effects for consumers, as the NBS ordered banks to remove detected irregularities of systemic nature in respect of all consumers affected.
    • The financial effect for consumers arising from supervision procedures this year came at RSD 99.5 million.
    • The measures taken by the NBS in these procedures not only concern material compensation for users, but also include orders through which future irregularities are precluded (preventive action).
  • Owing to past NBS activities, a large number of borrowers used the option of early loan repayment, thus reducing the amount of their outstanding debt.
  • According to data and estimates, this effect amounts to around EUR 5 million per annum at banking sector level.

Setting new standards in innovation

  • In the course of 2024 (ending with 24 December), the NBS RTGS and clearing systems executed more than 227.2 million transactions worth around RSD 215.1 trillion.
  • The Republic of Serbia, on its part, did everything that was necessary to meet all the formal criteria for joining the Single Euro Payments Area (SEPA).
    • The necessary regulations were amended (including amendments and supplements to the Law on Payment Services, which introduced, inter alia, the concept of open banking),
    • In collaboration with other state institutions, a draft application for joining SEPA was prepared and sent to the European Commission and the European Payments Council for assessment.
  • The NBS system for instant payments (NBS IPS system) processed in 2024 (ending with 24 December) over 85.3 million transactions, which is by over 30.9% more than in the same period of 2023.
  • Rakuten Viber expressed interest in introducing specific services based on instant payments in its application.
  • The number of transactions initiated by scanning the NBS IPS QR code increased by over 37% relative to the previous year.
  • At end-Q3 2024, there were:
    • 4.5 million registered users of mobile banking, up by 10.1% from end-2023,
    • 4.3 million registered users of electronic banking, up by 5.5% from end-2023.
  • The development of the payment services market continued in our country, where, in addition to 20 banks, payment services are also provided by eight payment institutions and seven electronic money institutions. Seven payment institutions, five electronic money institutions, and the public postal operator have been providing payment services through a widely distributed network of agents.
  • The expansion of the acceptance network for UnionPay cards issued abroad in the DinaCard acceptance network continued. So far, the acceptance of UnionPay cards has been enabled on 81% of ATMs, while at points of sale, it has been enabled on 73% of POS terminals.
  • The acceptance network for the “Get dinars” service expanded further, enabling more people to make use of this cashback service when paying for their purchase at points of sale.
  • Banka Poštanska štedionica AD Beograd also joined the NBS’s International and Interbank Clearing of FX Payments in 2024, enabling a faster and simpler execution of transactions for its clients. Currently, the NBS’s International and Interbank Clearing of FX Payments includes the NBS, 13 banks from Serbia, seven banks from Bosnia and Herzegovina and one bank from Montenegro.

Foreign and exchange operations

  • In 2024, the NBS performed the Republic of Serbia’s foreign credit liabilities acting in the capacity of the Government’s agent, as well as recorded foreign credit transactions (borrowing and lending), supervised FX operations (on-site and off-site) and actively cooperated with numerous institutions in the country with a view to protecting the financial and economic system from the risk of money laundering and other illegal actions.
  • We also supervised exchange operations, through on-site procedures at 289 exchange offices and 257 off-site procedures. We revoked temporarily the authorisation from 28 exchange dealers as the supervisory procedure determined that they no longer meet the conditions for the performance of exchange operations prescribed by law and/or NBS regulation or that they acted contrary to the provisions of the law and/or regulations.

A package of legislative proposals to improve the legal framework  

We have prepared a package of legislative proposals to improve the regulatory and supervisory framework in the area of banking and other financial services, primarily with the aim of providing additional protection to the users of these services and further developing the financial market, which will, in the true sense of the word, serve citizens and businesses, contributing to the economic development of our country:

  • Proposal of the Law on the Protection of Financial Service Consumers - the main goal is to raise standards and improve awareness in the use of banking and other financial services, as well as to strengthen legal security, economic predictability, and stability regarding the position of financial service consumers, by limiting interest rates on loans – housing, consumer, cash, credit cards, and overdrafts.
  • Proposal of the Law on Amendments and Supplements to the Law on Banks – strengthening the supervisory mechanism of the NBS within the banking sector and improving the legal framework for bank resolution by establishing the Bank Resolution Fund, which ensures an additional level of protection of budgetary and public funds and prevents the burden of rescuing potentially failing banks from falling on taxpayers.
  • Proposal of the Law on Amendments and Supplements to the Law on the National Bank of Serbia – the proposed novelties are in line with modern trends in central banking in the domain of institutional settings and the functional authorities of the central bank. At the same time, they represent alignment with the EU acquis within Negotiation Chapter 17 – Economic and Monetary Policy, aiming to strengthen the independence of the NBS in those areas that have been identified as one of the conditions for closing this chapter.

Governor’s Office