As of the end of September, the total value of approved loans in Montenegro amounted to 4.6 billion euros, according to data from the Central Bank (CBCG). Compared to the end of last year, loans have increased by 511.5 million euros or 12.49%, while in the one-year comparison to the end of September last year, they saw a growth of 612.2 million euros or 15.32%.
Of the total amount of gross loans and receivables, 1.94 billion euros, or 42.18%, relate to individuals, while 2.66 billion euros, or 57.82%, are for legal entities, said Marko Tintor, Director of the System Analysis and Control Development Directorate at CBCG.
Tintor further explained that, compared to the end of last year, loans approved to individuals increased by 209.4 million euros or 12.08%, while loans to legal entities rose by 302 million euros or 12.79%.
In comparison to the same period last year, loans to individuals increased by 253.9 million euros or 15.03%, while loans to legal entities grew by 358.3 million euros or 15.54%, Tintor specified.
Montenegrin citizens are borrowing an average of 21.2 million euros more each month.
According to the most recent available data, the average loan amount per adult citizen is 3,972 euros, Tintor said. He attributes the growth in approved loans to a number of factors, including a favorable investment climate, decreasing inflation, lower uncertainty, and rising average wages.
Additionally, a significant factor has been the promotional loan offers for the population sector, with lower interest rates, Tintor noted.
According to CBCG data, by the end of September, the average weighted nominal interest rate on total loans reported to the Credit Registry was 6.09%, while the effective interest rate was 6.59%.
The average weighted nominal and effective interest rates for loans from microfinance institutions (MFIs) in September were 19.43% and 21.74%, respectively, Tintor said.
He highlighted that, thanks to the promotional loan offers for the population sector launched in April and supported by all banks, the average weighted effective interest rate on newly approved loans to individuals decreased by 1.02 percentage points compared to the first quarter of the year. In some banks, this reduction was even more pronounced, reaching up to 1.81 percentage points.
With positive global trends in interest rates and the continuation of the promotional offer until the end of the year, further reductions in interest rates are expected in the coming period, Tintor added, also noting that interest rates for microfinance institutions have fallen on a yearly basis, with a decrease of 0.38 percentage points in nominal rates and 0.71 percentage points in effective rates.
Tintor explained that the rise in interest rates in the previous period was influenced by the increase in reference interest rates set by central banks, global inflation, and the growing trend of global uncertainty, which stems from multiple global conflicts.
Given these unfavorable trends, the CBCG proactively responded by launching the promotional loan initiative for the population sector, which was supported by all banks in Montenegro. This initiative resulted in a significant reduction of the average weighted effective interest rate on newly approved loans to the population sector by over one percentage point. We expect this trend to continue in the future, Tintor emphasized.
Regarding the intended purpose of the loans, Tintor stated that the largest portion relates to cash loans for non-specific purposes, which account for 20.78%, followed by loans granted for liquidity purposes at 19%.
Additionally, over 10% of the loan portfolio is made up of housing loans, which account for 14.72%. The majority of loans in the overall credit portfolio are long-term loans, comprising 77.08%, while short-term loans make up 22.92%, Tintor specified.
