Acquisitions of international banks by local buyers since the beginning of 2017 is a good sign for Serbian banking market. Although a small step in terms of market share, these activities are a long-awaited sign of the inevitable consolidation of Serbia’s banking sector, said the analysts of the Samardzic, Oreski & Grbovic Law Firm in their outlook of the banking market in Serbia for 2017
Analyzing the Serbian banking market in 2016, the analysts point out the three main characteristics: market fragmentation, ownership changes and balance sheets cleaning from NPLs.
Out of 30 active banks, the first 10 have market share 77,4% and only the first 6 have market share above 5%. Pre-tax profit of the first 10 is EUR 179,5 million and the same figure for the whole market is EUR 173 million. These few facts are showing clear unsustainability of the current market structure in the long run, especially from the perspective of banks with total assets below EUR 600 million.
Greek and Serbian banks (at least partially state owned) seem as most probable two groups of banks in which sales or mergers might occur in relatively short time period.
In the last three years many banks have changed owners (Hypo, Cacanska, Findomestic) and there are also new players in the market (UAE’s Royal Group, Bank of China). Further consolidation is inevitable, but it is still hard to predict how long these processes will last.
Strong increase of NPLs which started almost 10 years ago seems to be under control. Risk management systems and credit policies have been revised and implemented. Banks are now regularly selling these bad parts of their portfolios and the main problem is to keep loan volumes on a satisfactory level with strong margin pressures, low credit demand and very rigid risk approach.
Please find here the main statistical and financial data for Serbian banking industry for 2016. Please find here the main statistical and financial data for Serbian banking industry for 2016.
Author: Milos Velimirovic of the Smardzic, Oreski & Grbovic Law Firm