In the first three months of this year, the banking sector in Montenegro has shown significant growth, with a nearly 40% increase in approved loans and a continued decline in the average effective interest rate. In March, the average effective rate stood at 5.98%, compared to 7.43% in the same month last year, according to the Central Bank of Montenegro.
Montenegrin banks approved loans worth €502 million in the first quarter of this year, up from €367 million during the same period in 2024. The decrease in interest rates is largely attributed to the drop in the six-month EURIBOR rate, which fell from 3.8-3.9% in early 2024 to 2.4-2.6% in the same period this year, continuing to decrease. This rate now stands at 2.11%, suggesting a further slight decline in interest rates in Montenegro.
Almost one-third of the new loans approved between January and March were cash loans, totaling €152 million, compared to €112 million last year. In March alone, the value of cash loans reached €62.2 million, the highest monthly total recorded in Montenegro. The effective interest rate on cash loans has decreased from 9.73-9.85% last year to 7.55-7.85% this year.
Mortgage loans also saw significant growth, rising from €26 million in the first quarter of 2024 to €49 million this year. The effective interest rate on these loans dropped from 6.35-6.57% to 5.31-5.41%.
Loans for liquidity purposes increased from €127 million to €146 million, with the effective interest rate falling from 5.44-6% to 5.16-5.83%.
Loans for investment projects more than tripled, from €16.2 million last year to €52 million this year, with interest rates dropping from 6.22-6.38% to 4.40-6.32%. Loans for refinancing other bank obligations also grew from €22.3 million to €40.5 million, with rates decreasing from 7.91-8.64% to 5.97-7.15%.
The total amount of active loans in Montenegro’s banks reached €4.85 billion by the end of March, a €600 million increase from the previous year. Citizens owed €2.07 billion, an increase of €330 million, while domestic businesses owed €1.62 billion, up by €260 million. Foreign citizens and companies owed €883 million, a rise of €80 million.
Deposits in Montenegrin banks reached €5.6 billion, €300 million higher than last year. Citizens held €2.15 billion in deposits, €100 million more than the amount of loans granted to this group. The largest average interest rate on time deposits for individuals was 2.47%, for those with a term of five years or more.
Overall, the Montenegrin banking sector has experienced a period of strong growth in loans and a steady decline in interest rates, which may continue throughout the year.
