Montenegro witnessed a historic surge in loan uptake by citizens in March, as they borrowed a remarkable €76.7 million from local banks, marking the highest monthly loan approval figure to date, according to data from the Central Bank. This surpasses the previous record set in February of this year, when citizens secured €68.5 million in bank loans.
Insiders from the banking sector attribute this notable increase in citizen loans to a substantial rise in interest among retirees, particularly in cash loans. This heightened interest from pensioners has been ongoing since mid-February, following a significant number receiving augmented minimum pension amounts. It’s estimated that pensioners have collectively accessed around €40 million in loans from banks since then.
In January, total loans granted to citizens amounted to €38.7 million, while last year, this figure typically hovered around €50 million, peaking in November at €59.6 million.
Cash loans dominated the loan landscape in March, accounting for €47.6 million of the total. This figure broke the previous record set in February of this year, when cash loans reached €41.6 million, while January saw cash loans approved totaling €22.3 million.
The surge in loan activity coincides with legislative changes enacted in December, which raised the minimum pension from €296 to €450, a 52% increase, effective January. Approximately 40,000 pensioners received the enhanced amount for the first time in mid-February.
Several banks swiftly recognized the creditworthiness of this expanded pensioner demographic post-legislation, anticipating increased loan demand. They promptly introduced specialized credit lines for pensioners, offering slightly reduced interest rates, lower fees, and even supermarket vouchers. Consequently, a surge in pensioner loan applications was observed immediately after the pension increase in February.
Although interest in loans remained high among pensioners in February and March, recent trends suggest a slight decline in demand.
The bulk of the loan activity, particularly the growth observed, can be attributed to pensioners, with an estimated €40 million borrowed primarily as cash loans, according to data from banking sources. This underscores the significant role pensioners have played in driving the recent surge in loan uptake.
Overall, the banking sector’s stability remains intact, with total loans owed by individuals and businesses reaching €4.25 billion by the end of March, representing a €400 million increase compared to the same period last year. This ongoing upward trajectory in loan activity underscores the robustness of Montenegro’s banking system.
