The total debt of Montenegrin citizens to banks stands at approximately 1.9 billion EUR, which is around 500 million more than at the end of 2020, according to data from the Central Bank of Montenegro (CBCG).
The CBCG stated that the latest available data, provided by banks, shows that the total loans approved to citizens at the end of November amounted to 1.9 billion EUR, representing 42.94% of the total loans in the banking system.
“In comparison to the same period in 2023, when loans amounted to 1.7 billion EUR, loans granted to citizens increased by 279.9 million EUR or 16.28%,” the CBCG said.
Statistics also show that since 2020, total debt from citizens to banks has been on a steady rise.
“At the end of November, total loans approved to citizens amounted to 1.9 billion EUR, showing a growing trend. In December 2020, these loans were 1.4 billion EUR, in December 2021 they were 1.5 billion EUR, at the end of 2022 they reached 1.6 billion EUR, and at the end of 2023, they stood at 1.7 billion EUR,” the CBCG added.
While citizen debt has increased, interest rates have seen a decrease, at least in the past year.
The CBCG stated that the average weighted effective interest rate on all approved loans at the end of November was 6.55%, a decrease of 0.04 percentage points compared to December 2023.
“It should also be noted that the average weighted effective interest rate on total loans includes loans approved in earlier periods, many of which were issued during times of high interest rates,” the CBCG explained.
As an indicator of interest rate movements, the rates on newly granted loans should also be considered. The average weighted effective interest rate on new loans at the end of November was 5.98%, which is 0.53 percentage points lower than in December 2023.
The CBCG recalled that at the beginning of the second quarter, it initiated an action to lower interest rates, which was supported by all banks operating in Montenegro, offering citizens reduced interest rates on the most sought-after types of loans.
“As a result of the initiative, effective interest rates on new loans to citizens decreased by 1.11 percentage points from 8.75% to 7.64% between April and December 20,” the CBCG said.
They also pointed out that interest rates are a market category influenced by numerous economic factors, including supply and demand for capital, the country’s credit rating, inflation, economic activity, as well as the risk of the client and the proposed project for financing.
“In addition, we would highlight factors from the international market, primarily decisions made by the European Central Bank (ECB) and other key banks regarding their reference interest rates, as well as geopolitical challenges,” the CBCG added.
The CBCG noted that it does not have instruments through which it could influence interest rates and, therefore, does not make projections regarding their movement.
“It is expected that, in the near future, there will be a relaxation of policies by major central banks, including the ECB, which will subsequently lead to a reduction in interest rates,” the CBCG concluded.
