Crisis situations show best that Serbia definitely needs its Association of Banks, an organisation that performs important work for banks and the entire financial system. This has been the case for the past 100 years of the Association’s existence, and will remain so in the future
Stating with optimism that events in Ukraine cannot lead to great risk for our banks, Vladimir Vasić, Secretary General of the Association of Serbian Banks, spoke to CorD Magazine about inflation, the indebtedness of individuals and industry, the consolidation of the banking sector and other topics.
You recently stated that the quality of service provided by banks in Serbia and the overall stability of the banking system are at a very high level. How resilient are our banks to external, global influences?
– If anyone thinks they can be resilient to global events today, they are definitely mistaken. Globalisation is a process that has long taken hold of all segments of life and no one, including Serbia and, therefore, the banking system in Serbia, is completely beyond the influence of the global market. This is a general view, but if the real question is whether our banks are in danger or at a greater risk due to events in Ukraine and beyond, then the answer is negative. This is firstly because the banking system confirmed its satisfactory capitalisation and stability during the pandemic. Furthermore, banks are savings and loan organisations, the money they have at their disposal is the money of Serbian clients, and is not even directly tied to the international owner, let alone foreign banks. So, in that sense, we can remain calm.
Inflation has already reached 9.6% and is expected to increase further, while the NBS has intervened only once, increasing interest rates by one percentage point. Do you believe this measure was enough?
– If we take a look at the past several years, it is difficult to find a period when the dinar exchange rate was this stable, and inflation this predictable. No stronger argument than this can be found to show that the current leadership of the National Bank has really conducted its monetary policy well, and I see no reason to doubt that it will continue to do so in the future. Regarding inflation, we need to understand that it is global, the world’s largest economies are currently experiencing year-on-year inflation of 9 or 10%.
Inflation is a consequence of rising fuel prices and broken global supply chains, which no central bank can currently influence
This inflation is also imported, mainly caused by an increase in fuel prices and broken global supply chains. This is not something any central bank can currently have any influence over. Projections by the NBS indicate that inflation will start to settle during the middle of the year, and in my opinion we can believe this assessment. In any case, the NBS still has many instruments it has not used and it has ways to react to unforeseen circumstances.
The merger of NLB Bank Belgrade and Komercijalna Banka into the new NLB Komercijalna Banka was recently completed. Do you think this consolidation should continue?
– Every consolidation produces a stronger banking group and usually introduces new services and technologies to the market, generating a positive signal for the banking system, and therefore for the entire Serbian economy.
Whether bank mergers should continue is a question for their owners. If they assess that they have an interest in new acquisitions, if the market shows such a need, rest assured that we will witness new consolidations.
Total lending increased by 9.7% in 2021. Individuals mainly took out cash and housing loans, which is assessed as a positive signal of economic activity. What is the situation now?
– Our banking sector has been showing positive trends for years without stopping, not even during the severe crisis caused by the Covid pandemic. We are still showing growth in both savings and loans. I believe this indicates at least two things: first, that we have achieved a real increase in standards through growing wages and stable disbursement of pensions, while at the same time showing a significant increase in confidence in the local currency and the banking system. The fact that we are witnessing growth in both retail and commercial activities is a positive sign.
Every person in Serbia has a debt of just under 2,000 euros, in Croatia it is 3,000, while the average debt of the Slovenian population is around 5,000 euros. Is the risk of borrowing higher now?
– Regarding personal risk for each of us, we always appeal to citizens to be well informed and to make responsible financial decisions on their own. The extent to which borrowing is a risk depends not only on the global situation, but far more on one’s personal financial status.
Positive trends in our banking system have been present for years and have not stopped, even during the severe crisis caused by the Covid pandemic
When it comes to potential over-indebtedness, I must say that citizens and companies have continued to settle their obligations to banks in a highly regular manner during the crisis, and the share of high-risk loans has never been lower. It is currently around 3.5%, whereas we may recall that only a few years ago it was as high as 18%.
Although membership of your Association has been voluntary for the past 100 years, it actually includes all the banks that operate in Serbia. Is the justification for the existence of the Association best seen in times of crisis?
– The fact that literally all banks in Serbia are part of our Association is a great compliment for us. This shows that there is a true need for us, and that we are doing important things for the banks and for the entire financial system. In fact, this was best seen when certain crisis situations had to be resolved. Banks, by the nature of their work, are oriented towards daily communication with clients and state bodies, and this is just one of their many duties. Therefore, some of the most important initiatives were shown to have originated from the Association of Banks. Furthermore, the ASB was one of the key factors in resolving these situations. I am convinced that, at this precise moment, when the Association is celebrating 100 years of its work, we have shown that we are very much necessary for another 100.