QUARTERLY REVIEW OF THE DYNAMICS OF FINANCIAL STABILITY INDICATORS FOR THE REPUBLIC OF SERBIA

Transcription

1 FINANCIAL STABILITY DEPARTMENT QUARTERLY REVIEW OF THE DYNAMICS OF FINANCIAL STABILITY INDICATORS FOR THE REPUBLIC OF SERBIA Second Quarter 215 September 215

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3 Content 1. Financial Soundness Indicators Chart 1.1. Financial soundness of Serbian banks compared to regional average annually 3 Chart 1.2. Overview of key macroeconomic risks annually 4 Table 1.1. Key macroprudential indicators quarterly 5 Table 1.2. Financial sector structure quarterly 6 2. Banking sector 2.1. Capital adequacy Chart 2.1. Capital adequacy ratio quarterly 9 Chart 2.2. Tier 1 regulatory capital to risk-weighted assets quarterly 9 Chart 2.3. Distribution of capital adequacy ratio (number of banks in each category) quarterly 9 Chart 2.4. Distribution of capital adequacy ratio (market share) quarterly 9 Chart 2.5. Distribution of Tier 1 to risk-weighted assets (number of banks in each category) quarterly 9 Chart 2.6. Distribution of Tier 1 to risk-weighted assets (market share) quarterly 9 Chart 2.7. Leverage indicators quarterly Asset and funding quality Chart 2.8. FX-loans to total loans quarterly 13 Chart 2.9. FX-deposits to total deposits quarterly 13 Chart 2.1. New FX-loans to total new loans monthly 13 Chart New FX-deposits to total new deposits monthly 13 Chart Bank claims on corporate sector by sectoral structure at certain date 13 Chart Non-performing loans quarterly 13 Chart Non-performing loans to capital quarterly 14 Chart Non-performing loans coverage quarterly 14 Chart Categories D and E quarterly 14 Chart Risk-weighted assets to total assets quarterly 14 Chart Risk-weighted assets and total assets growth quarterly 14 Chart Risk profile of balance sheet assets quarterly 14 Chart 2.2. Risk profile of off-balance sheet assets quarterly 15 Chart Risk profile of assets quarterly 15 Chart Risk profile of credit risk-weighted assets quarterly 15 Chart Funding sources quarterly 15 Chart Total assets structure quarterly 15 Chart Liabilities structure quarterly 15 Chart Off-balance sheet assets: contingent liabilities quarterly Profitability Chart Profitability indicators quarterly 19 Chart Banks w/ ROE below 5% quarterly 19 Chart Banks that have encountered losses quarterly 19 Chart 2.3. Net operating income structure quarterly 19 Chart Contributions to net operating income growth quarterly 19 Chart Gain/loss before taxes quarterly 19 Chart Staff costs quarterly 2 Chart Cost-to-income ratio quarterly 2 Chart Banks w/ cost-to-income ratio above 8% quarterly 2 Chart Selected elements of gain/loss to total assets quarterly 2 Chart Interest claims (liabilities) to total assets (liabilities) quarterly 2 Chart Interest rates on RSD loans monthly 2 Chart Interest rates on EUR loans monthly 21 Chart 2.4. Interest rates on RSD saving deposits monthly 21 Chart Interest rates on EUR saving deposits monthly Liquidity Chart LTD ratio monthly 25 Chart Average monthly liquidity ratio monthly 25 Chart Average monthly narrow liquidity ratio monthly 25 Chart Liquid assets monthly 25 Chart Household and corporate deposits to monetary aggregates monthly 25 Chart Banks` FX-reserves to household and corporate FX-deposits monthly Sensitivity to market risks Chart Quarterly breakdown of the sector's long and short FX position (in EUR) and foreign exchange quarterly 29 risk ratio Chart 2.5. Banks` net FX swap obligations to non-residents daily 29

4 3. Non-banking financial sector 3.1. Insurance sector Chart 3.1. Total premium per capita at certain date 33 Chart 3.2. Total premium to GDP at certain date 33 Chart 3.3. Total property insurance premium annually 33 Chart 3.4. Ownership structure of insurance companies at certain date 33 Chart 3.5. Coverage structure of technical reserves in life insurance at certain date 33 Chart 3.6. Coverage structure of technical reserves in non-life insurance at certain date 33 Chart 3.7. Profitability indicators for life insurance companies annually 34 Chart 3.8. Profitability indicators for non-life insurance companies annually 34 Chart 3.9. Combined insurance ratio quarterly Voluntary pension funds sector Chart 3.1. Total VPF net assets and index FONDex monthly 37 Chart Net assets growth and net contributions to VPF quarterly 37 Chart VPF asset structure at certain date Leasing sector Chart Investment structure by lessee at certain date 41 Chart Investment structure by leasing object at certain date Corporate sector Chart 4.1. Industrial production index quarterly 45 Chart 4.2. Real growth of corporate loans monthly 45 Chart 4.3. Corporate sector indebtedness quarterly 45 Chart 4.4. Currency structure of domestic corporate loans quarterly 45 Chart 4.5. Enforced collection quarterly Household sector Chart 5.1. Consumer prices and net household earnings monthly 49 Chart 5.2. Household loans growth monthly 49 Chart 5.3. Currency structure of household loans monthly 49 Chart 5.4. Structure of household savings quarterly 49 Chart 5.5. Contributions to real growth of FX savings monthly 49 Chart 5.6. Contributions to real growth of RSD savings monthly 49 Table 5.1. Household sector performance indicators quarterly 5 6. Macroeconomic environment 6.1. International macroeconomic environment Chart 6.1. Regional sovereign credit ratings dynamics monthly 53 Chart 6.2. Sovereign credit ratings dynamics of home countries of banks whose subsidiaries operate in monthly 53 Serbia Chart 6.3. CDS spreads on bonds of home countries of parent banks whose subsidiaries operate in Serbia daily 53 Chart 6.4. CDS spread on Greek bonds daily 53 Chart 6.5. Sovereign bond yields: Serbia and CEE region daily 53 Chart 6.6. Sovereign bond yields: Serbia and home countries of parent banks whose subsidiaries operate in daily 53 Serbia Chart 6.7. Greek bond yield daily 54 Chart 6.8. Emerging Market Bond Index: Serbia and EMBI Global monthly 54 Chart 6.9. Emerging Market Bond Index: Serbia and CEE countries monthly 54 Chart 6.1. ECB interest rates and EONIA daily 54 Chart Risk premium on the interbank money market monthly 54 Chart Inflation in the eurozone monthly 54 Chart CDS spreads on bonds issued by Greek parent banks whose subsidiaries operate in Serbia daily 55 Chart CDS spreads on bonds issued by Italian parent banks whose subsidiaries operate in Serbia daily 55 Chart CDS spreads on bonds issued by Austrian parent banks whose subsidiaries operate in Serbia daily 55 Chart CDS spreads on bonds issued by French parent banks whose subsidiaries operate in Serbia daily 55 Chart Stock price dynamics of Greek parent banks whose subsidiaries operate in Serbia daily 55 Chart Stock price dynamics of Italian parent banks whose subsidiaries operate in Serbia daily 55 Chart Stock price dynamics of Austrian parent banks whose subsidiaries operate in Serbia daily 56 Chart 6.2. Stock price dynamics of French parent banks whose subsidiaries operate in Serbia daily 56 Chart Ownership structure of banks in Serbia quarterly 56 Chart BIS member banks` gross exposure towards emerging markets quarterly 56

5 6.2. Domestic macroeconomic environment Chart Contributions to real GDP growth by production-side components quarterly 59 Chart Contributions to real GDP growth by expenditure-side components quarterly 59 Chart Industrial production index monthly 59 Chart Unemployment rate quarterly 59 Chart Consumer price index monthly 59 Chart Contributions to CPI changes monthly 59 Chart NBS key policy rate and BEONIA daily 6 Chart M money-market interest rates monthly 6 Chart BELIBOR interest rates monthly 6 Chart Exchange rate dynamics of national currencies against the euro monthly 6 Chart Dynamics of the RSD exchange rate against EUR, CHF and USD monthly 6 Chart Dynamics of the RSD exchange rate against EUR and NBS interventions on the interbank FX monthly 6 market Chart Volatility of the exchange rate monthly 61 Chart Bid-ask spread on the interbank FX market daily 61 Chart Current account deficit quarterly 61 Chart Net foreign direct investments quarterly FX reserves adequacy indicators Chart Coverage of imports by FX reserves quarterly 65 Chart 6.4. Coverage of short-term external debt at remaining maturity by FX reserves quarterly 65 Chart Coverage of high-power (H) money by FX reserves quarterly 65 Chart Coverage of M1 monetary aggregate by FX reserves quarterly Indebtedness of the Republic of Serbia Chart Fiscal result quarterly 69 Chart Public revenues and expenditures quarterly 69 Chart Public debt dynamics quarterly 69 Chart Public debt to GDP monthly 69 Chart Public debt by currency quarterly 69 Chart Public debt by original maturity monthly 69 Chart Public debt by remaining maturity monthly 7 Chart 6.5. Internal and external component of public debt quarterly 7 Chart Government securities sold on the primary market by buyers monthly 7 7. Financial markets and real estate market Chart 7.1. Primary market demand for RSD government bonds monthly 73 Chart 7.2. Realisation rate and foreign investors` share in auctions of RSD government bonds monthly 73 Chart 7.3. Interest rates on treasury bills, primary market monthly 73 Chart 7.4. Interest rates on zero coupon RSD government securities monthly 73 Chart 7.5. Foreign investors` share at RSD government bond auctions quarterly 73 Chart 7.6. RSD government securities, outstanding stock quarterly 73 Chart 7.7. Primary market of RSD government bonds investors structure monthly 74 Chart 7.8. Euro-denominated government bonds, outstanding stock quarterly 74 Chart 7.9. RSD government bonds, monthly turnover monthly 74 Chart 7.1. Maturity of RSD government securities monthly 74 Chart Belgrade Stock Exchange market capitalisation quarterly 74 Chart Belgrade Stock Exchange equity market turnover monthly 74 Chart Stock markets' indices daily 75 Chart Frozen foreign currency savings bonds turnover monthly 75 Chart Real estate index DOMex quarterly 75 Chart Indices of the number of newly issued building permits monthly 75 Chart Price-to-income quarterly 75 Definitions 77

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7 1. Financial soundness indicators 1

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9 Chart 1.1. Financial soundness of Serbian banks compared to regional average CAR ROE C/A ROA NPL Provisions/ NPL Serbia, 28 Region, 28 CAR ROE C/A ROA NPL Provisions/ NPL Serbia, 213 Region, 213 CAR ROE C/A ROA NPL Provisions/ NPL Serbia, 214 Region, 214 Source: GFSR and National Bank of Serbia. 3

10 Chart 1.2. Overview of key macroeconomic risks Current account deficit (% of GDP) Private external debt (% of GDP) Level of euroisation* Public debt (% of GDP) Coverage of imports by FX reserves (inverse scale) Current account deficit (% of GDP) Private external debt (% of GDP) Level of euroisation* Public debt (% of GDP) Coverage of imports by FX reserves (inverse scale) Current account deficit (% of GDP) Private external debt (% of GDP) Level of euroisation* Public debt (% of GDP) Coverage of imports by FX reserves (inverse scale) * Share of FX and FX-indexed loans in total loans of corporate and households. 4

11 Table 1.1. Serbia: Key Macroprudential Indicators 1) (in % unless otherwise indicated) Capital Adequacy Regulatory capital to risk weighted assets Tier I capital to risk weighted assets Capital to assets Asset Composition and Quality Agriculture loans to total loans Industry loans to total loans Trade loans to total loans Construction loans to total loans Other loans to enterprises to total loans Loans to households to total loans Of which: Mortgage loans Loans to other economic sectors to total loans Gross non-performing loans (NPL) to total gross loans Net non-performing loans (NPL) to total net loans Specific provisions of total loans to total gross loans IFRS provisions of total loans to gross non-performing loans (NPL) Specific provisions of NPL to gross NPL Regulatory provisions to gross non-performing loans (NPL) Large exposures to regulatory capital Profitability ROA ROE Net interest margin to average balance sheet assets Net interest margin to gross operating income Operating expenses to gross operating income Operating expenses to average balance sheet assets Personnel expenses to operating expenses Liquidity Liquid assets to total assets Liquid assets to short-term liabilities Liquid assets (core) to total assets Liquid assets (core) to short-term liabilities FX-denominated and FX-indexed loans to total gross loans FX-denominated and FX- indexed deposits to total deposits Loans to non-financial sector to deposits of non-financial sector Loans to non-financial and non-public sector to deposits of non-financial and non-public sector FX denominated and FX-indexed loans to FX denominated and FX-indexed deposits Deposits to total assets FX denominated and FX-indexed liabilities to total liabilities Sensitivity to Market Risk Net open FX position (overall) to regulatory capital Classified off-balance sheet items to total assets Classified off-balance sheet items to total classified balance sheet assets Market-based Indicators Credit rating S&P BB- BB- BB- BB BB- BB- BB- BB- BB- Fitch BB- BB- BB- BB- BB- BB- B+ B+ B+ Moody's B1 B1 B1 B1 Country`s risk premium - EMBI (aop, in bp) International Reserves Adequacy Indicators International reserves to months of imports (in mos) Gross international reserves Net international reserves International reserves to short-term liabilities at remaining maturity 3) Gross international reserves Net international reserves ) An adjustment is made in the deductables of Tier 1 capital. Data download and use allowed. Due to technical reasons, NBS makes no warranties as to the accuracy or completeness of the information. Q1 215 Q

12 Table 1.2. Financial sector structure Q1 215 Q2 215 Assets Assets Assets Assets Assets Assets Assets No. RSD No. RSD No. RSD No. RSD No. RSD No. RSD No. RSD % % % % % % billion billion billion billion billion billion billion % Financial sector 84 2, , , , , , , (in % of GDP) 95.7% 89.4% 92.8% 85.2% 83.2% 83.% Banking system 33 2, , , , , , , State-owned banks Local private banks Foreign-owned banks 21 1, , , , , , , Greek Italian French Austrian Other Nonbank financial institutions Insurance companies Pension funds Leasing companies

13 2. Banking sector 2.1. Capital adequacy 7

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15 Chart 2.1. Chart 2.2. Capital adequacy ratio Tier 1 regulatory capital to risk-weighted assets (%) (%) III I III I III I III I III I III I III I Capital adequacy ratio Regulatory minimum Basel standard 1 5 III I III I III I III I III I III I III I * Up to Q4 211 modified Tier 1 regulatory capital is shown. Chart 2.3. Chart 2.4. Distribution of capital adequacy ratio Distribution of capital adequacy ratio (number of banks in each category) (market share*, %) III I III I III I III I III I III I III I Up to 15% From 15 to 2% From 2 to 25% Over 25% III I III I III I III I III I III I III I Up to 15% From 15 to 2% From 2 to 25% Over 25% * Measured by the share in total net assets of the banking sector. Chart 2.5. Chart 2.6. Distribution of Tier 1 to risk-weighted assets Distribution of Tier 1 to risk-weighted assets (number of banks in each category) (market share*, %) III I III I III I III I III I III I III I Up to 1% From 1 to 15% From 15 to 2% Over 2% III I III I III I III I III I III I III I Up to 1% From 1 to 15% From 15 to 2% Over 2% * Measured by the share in total net assets of the banking sector. 9

16 Chart 2.7. Leverage indicators (%) l III I III I III I III I III I III I III I Regulatory capital to total assets Capital to assets 1

17 2. Banking sector 2.2. Asset and funding quality 11

18 Real estate: Education, health and social care: 12

19 1,2 16,5 17,7 15,7 16,5 17,5 17,8 16,9 17,1 18,6 18,8 19, 2,4 19,5 19,9 18,6 19,9 19,9 21,1 21,4 22,2 23, 23, 21,5 22,6 22,8 86% 34% 35% 75% 9% 82% 33% 43% 65% 5% 49% 78% 76% 9% 89% 59% Chart 2.8. Chart 2.9. FX-claims to total banking sector claims on corporate sector and households FX-deposits to total deposits (RSD bn) (%) (RSD bn) (%) III I III I III I III I III I III I III I FX-loans to households (lhs) Dinar loans to households (lhs) FX-loans to enterprises (lhs) Dinar loans to enterprises (lhs) Total FX-loans to total loans (rhs) III I III I III I III I III I III I III I FX-deposits of households (lhs) Dinar deposits of households (lhs) FX-deposits of enterprises (lhs) Dinar deposits of enterprises (lhs) Total FX-deposits to total deposits(rhs) Chart 2.1. Chart New FX-loans to total new loans New FX-deposits to total new deposits (RSD bn) (%) (RSD bn) (%) FX-loans to households (lhs) Dinar loans to households (lhs) FX-loans to enterprises (lhs) Dinar loans to enterprises (lhs) Total new FX-loans to total new loans (rhs) FX-deposits of households (lhs) Dinar deposits of households (lhs) FX-deposits of enterprises (lhs) Dinar deposits of enterprises(lhs) Total new FX-deposits to total new deposits (rhs) Chart Chart Bank claims on corporate sector by sectoral Non-performing loans structure (share in total gross loans, %) (Jun 215, RSD bn and %) Education, health and social care: 78,4 bn; 7% Real estate: 155,2 bn; 14% Trade: 5,7 bn; % Transportation 261,8 bn; 24% Other: 94,8 bn; 8% Agriculture, forestry and fishing: 64,6 bn; 6% Construction: 86, bn; 8% Mining, manufacturing 329,5 bn; 3% Electricity: 34,8 bn; 3% ,3 14,2 III I III I III I III I III I III I III I

20 63,7 64,1 62,7 63,2 61,2 6,6 59,8 58,5 58,2 56,1 56,5 55,2 57,3 57,1 55,4 86,7 93,5 94,2 89,1 83,4 79,6 79,3 8,4 8,7 8,7 82,2 83,3 81,5 Chart Chart Non-performing loans to capital Non-performing loans coverage (%) (%) III I III I III I III I III I III I III I Net NPLs totier 1 Net NPLs to regulatory capital Net NPLs to capital III I III I III I III I III I III I III I Allowances for impairment of NPLs to NPLs Calculated reserve for estimated BS* losses to NPLs Calculated reserve for estimated losses to NPLs * Balance sheet. 1 Chart Chart Categories D and E Risk-weighted assets to total assets (%) (%) (%) III I III I III I III I III I III I III I Share in total classified assets (lhs) Share in equity* (rhs) * Shareholders' equity, government and other capital III I III I III I III I III I III I III I Chart Chart Risk-weighted assets and total assets growth Risk profile of balance sheet assets (index, September 28 = 1) (prior to introduction of Basel II) (%) III I III I III I III I III I III I III I '15 Risk-weighted assets Total assets I III I III I III I III I III* I III I III I III Weight % Weight 2% Weight 5% Weight 75% Weight 1% Weight 125% * Changes in the classification of assets by risk weights. 1 14

21 Chart 2.2. Chart Risk profile of off-balance sheet assets Risk profile of assets (prior to introduction of Basel II) (total on and off-balance sheet risk-weighted assets, prior to introduction of Basel II) (%) (%) I III I III I III I III I III* I III I III I III Weight % Weight 2% Weight 5% Weight 75% Weight 1% Weight 125% * Changes in the classification of assets by risk weights. * Changes in the classification of assets by risk weights. I III I III I III I III I III* I III I III I III Weight % Weight 2% Weight 5% Weight 75% Weight 1% Weight 125% Chart Chart Risk profile of credit risk-weighted assets Funding sources (after the introduction of Basel II) (%) (RSD bn) (%) IV I II III IV I II III IV I II III IV I II Weight % Weight 1% Weight 2% Weight 35% Weight 5% Weight 75% Weight 1% Weight 15% I III I III I III I III I III I III I III I Liabilities (lhs) Equity (lhs) Liabilities to total sources (rhs) 7 Chart Chart Total assets structure Liabilities structure (%) (%) III I III I III I III I III I III I III I III I III I III I III I III I III I III I Foreign assets Claims on government Claims on NBS Claims on other sectors Other assets Foreign liabilities Total deposits Еquity and reserves Other 15

22 Chart Off-balance sheet assets: contingent liabilities (%) III I III I III I III I III I III I III I Contingent liabilities to total off-balance sheet assets Capital to contingent liabilities 16

23 2. Banking sector 2.3. Profitability 17

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25 Chart Chart Profitability indicators Banks w/ ROE below 5% (%) (number of banks) (%) III I III I III I III I III I III I III I '15 ROA ROE III I III I III I III I III I III I III I '15 Number (lhs) Market share (rhs)* * Measured by the share in total net assets of the banking sector. Chart Chart 2.3. Banks that have encountered losses Net operating income structure (number of banks) (%) (%) III I III I III I III I III I III I III I '15 Number (lhs) Market share (rhs)* * Measured by the share in total net assets of the banking sector. * Net income from the trade in securities and dividend income. Source: National Bank of Serbia III I III I III I III I III I III I III I '15 Other* Net income from fees and commissions Net interest margin Chart Chart Contributions to net operating income growth Gain/loss before taxes (y-o-y growth, pp) (annualized) III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II '15 Other* Net income from fees and commissions Net interest margin Net operating income growth * Net income from the trade in securities and dividend income. (RSD bn) Loss of Agrobanka: 29.7 RSD bn III I III I III I III I III I III I III I '15 Gain Loss Net gain

26 Chart Chart Staff costs Cost-to-income ratio (share of operating expenses) (%) (%) III I III I III I III I III I III I III I ' III I III I III I III I III I III I III I '15 Range by banks* Banking sector * Excluding 5% of largest observations Chart Chart Banks w/ Cost-to-income ratio above 8% Selected elements of gain/loss to total assets (number of banks) (%) (%) III I III I III I III I III I III I III I '15 Number (lhs) Market share (rhs)* * Measured by the share in total net assets of the banking sector III I III I III I III I III I III I III I '15 Net interest margin Net income from fees and commissions Staff costs Other operating expenses Chart Chart Interest claims (liabilities) to total assets (liabillities) Interes rates on RSD loans (households and enterprises, new business) (%) (%) (%) III I III I III I III I III I III I III I '15 Interest claims/total assets (lhs) Interest liabillities/total liabillities (rhs) '15 Households Enterprises Total 2

27 Chart Chart 2.4. Interest rates on EUR loans* (households and enterprises, new business) Interest rates on RSD saving deposits (households and enterprises, new business) (%) (%) '15 Households Enterprises Total * EUR-denominated and EUR-indexed loans '15 Households Enterprises Total Chart Interest rates on EUR saving deposits* (households and enterprises, new business) (%) '15 Households Enterprises Total * EUR-denominated and EUR-indexed deposits. 21

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29 2. Banking sector 2.4. Liquidity 23

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31 Chart Chart LTD ratio Average monthly liquidity ratio (loans to deposits) ' Range by banks* '15. Banking sector Critical boundary * Excluding 1% largest observations. Chart Chart Average monthly narrow liquidity ratio Liquid assets (%) '15 Range by banks* Banking sector Critical boundary * Excluding 1% largest observations '15 Liquid assets/total assets Liquid assets/short-term liabilities Core liquid assets/total assets Core liquid assets/short-term liabilities Chart Chart Household and corporate deposits to monetary aggregates (%) (%) Banks` FX-reserves to household and corporate FX-deposits '15 Deposits/H* Deposits/M2 * High-power money. Deposits/M1 Deposits/M '15 25

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33 2. Banking sector 2.5. Sensitivity to market risks 27

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35 Chart Chart 2.5. Quarterly breakdown of the sector's long and short FX position (in EUR) and foreign exchange risk ratio Banks` net FX swap obligations to non-residents (RSD bn) (%) (EUR mn) (EUR/RSD) IV I II III IV I II III IV I II III IV I II Long EUR Short EUR FX risk indicator Receivables (lhs) Net obligations (lhs) Obligations (lhs) EUR/RSD (rhs) * From 1/1/212 to 3/31/215 29

36 3

37 3. Non-banking financial sector 3.1. Insurance sector 31

38 9, 8, 7, 6, 5, 4, 3, 2, 1,

39 Chart 3.1. Chart 3.2. Total premium per capita in 214* Total premium to GDP in 214* (USD) (%) 9, 8, 7, 6, 5, 4, 3, 2, 1, Life Non-life Life Non-life * estimate * estimate Source: Swiss Re, sigma No 4/215. Source: Swiss Re, sigma No 4/215. Chart 3.3. Chart 3.4. Total property insurance premium Ownership structure of insurance companies* (June 215, %) (EUR mn) Netherlands 12% Italy 12% Other 9% Serbia 36% Source: CEA Statistics and National Bank of Serbia. Austria 22% * Does not include reinsurance companies. Slovenia 9% Chart 3.5. Chart 3.6. Coverage structure of technical reserves in life Coverage structure of technical reserves in nonlife insurance insurance (June 215, %) (June 215, %) Republic of Serbia Government securities 89% Republic of Serbia Government securities 52% Deposits with banks 23% Other 2% Real estate 1% Deposits with banks 8% Other 17% Real estate 9% 33

40 Chart 3.7. Chart 3.8. Profitability indicators for life insurance companies Profitability indicators for non-life insurance companies (%) (%) Return on equity Return on assets Return on equity Return on assets Chart 3.9. Combined insurance ratio (%) I II Loss ratio Expense ratio Limit 34

41 3. Non-banking financial sector 3.2. Voluntary pension funds sector 35

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43 Chart 3.1. Chart Total VPF net assets and index FONDex Net assets growth and net contributions to VPF* (RSD bn) (index, = 1) (RSD mn) VPF net asset (lhs) FONDex (rhs) 2,3 2,2 2,1 2, 1,9 1,8 1,7 1,6 1,5 1,4 1,3 1,2 1,1 1, 5, 4, 3, 2, 1, -1, * Voluntary pension funds. * 4Q moving sums Net contributions Increase from investment Increase in total VPF assets I 215 Chart VPF asset structure (June 215, %) Republic of Serbia Т-bonds 83% Deposits 13% Other,1% Shares 4% Real estate,3% 37

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45 3. Non-banking financial sector 3.3. Leasing sector 39

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47 Chart Chart Investment structure by lessee Investment structure by leasing object (March 215, %) (march 215, %) Companies 82% Trucks, buses 33% Cars 29% Production machinery 5% Other* 1% Farmers 6% Legal entities in bankruptcy 1% Public companies 3% Enterpreneurs 4% Natural persons 3% * Banks, VPF, RS, local government, other residents, nonresidents. Commercial real estate 2% Rail vehicles, vessels 2% Equipment for services 3% Agricultural equipment 11% Construction machinery 4% Other 11% 41

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49 4. Corporate sector 43

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51 Chart 4.1. Chart 4.2. Industrial production index Real growth of corporate loans (index, 214 = 1) (y-o-y growth rates, %) Mining Manufacturing Domestic loans Cross-border loans Electricity, gas, steam, air-conditioning Industrial production Total corporate loans * Seasonally adjusted data. * Adjusted for exchange rate movements Chart 4.3. Chart 4.4. Corporate sector indebtedness Currency structure of domestic corporate loans (EUR bn) (% of GDP) (RSD bn) (%) IV IV IV IV I II III IV I II III IV I II III IV I External debt (lhs) Domestic debt (lhs) Domestic debt in % of GDP (rhs) External debt in % of GDP (rhs) Total debt in % od GDP (rhs) ,4 9 1,2 85 1, IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I Other currencies (lhs) CHF (lhs) USD (lhs) EUR (lhs) RSD (lhs) Share of FX loans* (rhs) * FX loans to total loans. Chart 4.5. Enforced collection (thousands) I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I (RSD bn) Number of blocked accounts (lhs)* Amount of money in blocked accounts (rhs) * End of period

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53 5. Household sector 47

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55 Chart 5.1. Chart 5.2. Consumer prices and net household earnings Household loans growth (index, 214 = 1) (y-o-y growth rates, %) Nominal net wages* Real net wages* Nominal loan growth rate Real loan growth rate* CPI * Seasonally adjusted data. * Adjusted for exchange rate movements Chart 5.3. Currency structure of household loans Chart 5.4. Structure of household savings (term and currency structure) (RSD bn) (%) (%) Other currencies (lhs) CHF (lhs) EUR (lhs) RSD (lhs) Share of FX loans (rhs)* * Share of FX loans in total loans IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II Short-term FX savings Long-term FX savings Short-term RSD savings Long-term RSD savings Chart 5.5. Chart 5.6. Contributions to real growth of FX savings Contributions to real growth of RSD savings (y-o-y growth rates, pp) (y-o-y growth rates, pp) Long-term FX savings Short-term FX savings Total FX savings growth Long-term RSD savings Short-term RSD savings Total RSD savings growth 49

56 Table 5.1. Household sector performance indicators (%, unless indicated otherwise) Table 5.1. (%, unless indicated otherw ise) Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Total indebtedness RSD bn EUR mn 5, ,75.5 5,644. 5,66.3 5, , , , , , , , ,9.3 5,99.6 6,17.7 6,182.8 FX to total loans 1) FX to total deposits 1) FX deposits to FX loans 1) Short-term loans to total loans LTV ratio 2) Average loan per employee RSD thousand EUR 2, , , ,671. 2, , ,69.8 2,763. 2,87.8 2, , , , , ,84.2 2,877.3 Average loan per resident RSD thousand EUR Average loan amount RSD thousand EUR 4, , , ,17.3 4, ,17.3 4,195. 4, ,378. 4,45.4 4, ,4.5 4, ,285. 4,34.7 4,158.1 Average loan per user RSD thousand EUR 4, , , ,12.5 5, , , ,335. 5, ,54.1 5, , , ,45.2 5, ,314.4 Source: National Bank of Serbia, Association of Serbian Banks, National Mortgage Insurance Corporation and Statistical Office of the Republic of Serbia. 1) FX loans and deposits include FX-indexed loans and deposits. 2) For loans insured w ith the National Mortgage Insurance Corporation. 5

57 6. Macroeconomic environment 6.1. International macroeconomic environment 51

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59 Chart 6.1. Chart 6.2. Regional sovereign credit ratings dynamics Sovereign credit ratings dynamics of home countries of banks whose subsidiaries operate in Serbia AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC '14 '15 AAA AA+ 2 AA AA- 18 A+ A16 A- BBB+ 14 BBB BBB- 12 BB+ BB 1 BB- B+ 8 B B- 6 CCC+ AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC C D '14 '15 25 AAA AA+ AA AA- A+ 2 A A- BBB+ BBB 15 BBB- BB+ BB BB- 1 B+ B B- CCC+ 5 CCC CCC- CC C D Serbia Bulgaria Croatia Hungary Romania Montenegro FYRM Bosnia* Slovenia * Bosnia and Herzegovina. Source: Standard & Poor's. Source: Standard & Poor's. Serbia Austria Italy Greece France Chart 6.3. Chart 6.4. CDS spreads on bonds of home countries of CDS spread on Greek bonds* parent banks whose subsidiaries operate in Serbia* (bp) (bp) , 25, 2, 15, 1, 5, 1,4 1,2 1, Austria Italy France * CDS spreads on five-year dollar bonds. * CDS spreads on five-year dollar bonds. Source: Reuters. Source: Bloomberg. Chart 6.5. Chart 6.6. Sovereign bond yields: Serbia and CEE region Sovereign bond yields: Serbia and home (%) countries of parent banks whose subsidiaries operate in Serbia* (%) Serbia Ukraine Hungary Serbia Italy Croatia Turkey Poland France Austria * Мaturity оver 5 years, USD-denominated. * 1 years maturity, EUR-denominated, exept RS bonds - USD-denominated. Source: Bloomberg. Source: Bloomberg. 53

60 Chart 6.7. Chart 6.8. Greek bond yield* Emerging Market Bond Index: Serbia and EMBI Global 25 AAA AA+ AA AA- A+ 2 A A- BBB+ BBB 15 BBB- BB+ BB BB- 1 B+ B B- CCC+ CCC CCC- CC C D (%) (bp) ,4 1,2 1, '14 '15 EMBI Serbia EMBI Global 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, * 1 years maturity, euro-denominated. Source: Bloomberg. Source: J.P. Morgan. Chart 6.9. Chart 6.1. Emerging Market Bond Index: Serbia and CEE countries (bp) (%) ECB interest rates and EONIA 1,4 1,2 1, '14 '15 Serbia Poland Turkey Croatia Hungary EONIA ECB key policy rate Interest rate on lending facility Interest rate on deposit facility Source: J.P. Morgan. Source: ECB, Bloomberg. Chart Chart Risk premium on the interbank money market Inflation in the eurozone (3M EURIBOR/EONIA spread, monthly averages, bp) (y-o-y rates) 14 (%) '14 ' '14 '15 Source: Bloomberg. Source: ECB. 54

61 Chart Chart CDS spreads on bonds issued by Greek parent banks whose subsidiaries operate in Serbia* CDS spreads on bonds issued by Italian parent banks whose subsidiaries operate in Serbia* (bp) 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 (bp) Alpha Bank A.E. National Bank of Greece S.A. Intesa Sanpaolo S.p.A. UniCredit S.p.A. * CDS spread on 5 year bonds. * CDS spread on 5 year bonds. Source: Bloomberg. Source: Reuters. Chart Chart CDS spreads on bonds issued by Austrian parent banks whose subsidiaries operate in Serbia* CDS spreads on bonds issued by French parent banks whose subsidiaries operate in Serbia* (bp) (bp) Erste Group Bank AG BNP Paribas S.A. Raiffeisen Zentralbank Oesterreich AG Societe Generale * CDS spread on 5 year bonds. * CDS spread on 5 year bonds. Source: Reuters. Source: Reuters. Credit Agricole S.A. Chart Chart Stock price dynamics of Greek parent banks Stock price dynamics of Italian parent banks whose subsidiaries operate in Serbia whose subsidiaries operate in Serbia (index, = 1) (index, = 1) EFG Eurobank Ergasias National Bank of Greece Alpha Bank A.E. Intesa Sanpaolo S.p.A. UniCredit S.p.A. Source: Bloomberg. Source: Bloomberg. 55

62 Chart Chart 6.2. Stock price dynamics of Austrian parent banks Stock price dynamics of French parent banks whose subsidiaries operate in Serbia whose subsidiaries operate in Serbia (index, = 1) (index, = 1) Erste Group Bank AG Raiffeisen Bank International Societe Generale Credit Agricole S.A. BNP Paribas Source: Bloomberg. Source: Bloomberg. Chart Chart Ownership structure of banks in Serbia* BIS member banks' gross exposure towards emerging markets (%) (index, December 26 = 1) IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II '15 Other banks Domestic publicly owned Domestic privately owned Austrian banks French banks Italian banks Greek banks * Share in net assets of the banking sector IV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I ' '13 '14 '15 Serbia Hungary Romania Bulgaria Czech Rep. Croatia Poland Turkey Source: Bank for International Settlements. 56

63 6. Macroeconomic environment 6.2. Domestic macroeconomic environment 57

64

65 Chart Chart Contributions to real GDP growth by productionside Contributions to real GDP growth by expenditure- components side components (y-o-y growth rates, pp) (y-o-y growth rates, pp) I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II* I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II* ' '15 Contribution of nontradable sectors Consumption Investment Contribution of tradable sectors Government Net export Real GDP growth Real GDP growth * NBS estimate. * NBS estimate. 2 Chart Chart Industrial production index Unemployment rate* (index, 214 = 1) (%) II IV II 21 IV II 211 IV II 212 IV 213 * According to the Labour Force Survey. Source: Statistical Office of the Republic of Serbia. I II III IV I 214 '15 Chart Chart Consumer price index Contributions to CPI changes (y-o-y growth rate, %) (y-o-y growth rates, pp) '15 CPI Inflation target Target bound '15 Food Other goods and services CPI

66 Chart Chart 6.3. NBS key policy rate and BEONIA 3M money-market interest rates (eop, %) (%) BEONIA Key policy rate Interest rate on credit facility Interest rate on deposit facility '15 3M LIBOR USD 3M LIBOR CHF 3M EURIBOR Source: Bloomberg. Chart Chart BELIBOR interest rates Exchange rate dynamics of national currencies against the euro (monthly averages, %) (index, = 1) BELIBORTN BELIBORSN BELIBOR1W BELIBOR2W BELIBOR1M Key policy rate Serbia Romania Poland Hungary Turkey Source: National Bank of Serbia and other central banks. Chart Chart Dynamics of the RSD exchange rate against EUR, Dynamics of the RSD exchange rate against EUR CHF and USD and NBS interventions on the interbank FX market (index, December 27 = 1) (EUR mn) (EUR/RSD) '15 RSD/CHF RSD/USD RSD/EUR '15 NBS interventions - sold (lhs) NBS interventions - bought (lhs) Average exchange rate (rhs)

67 Chart Chart Volatility of the exchange rate Bid-ask spread on the interbank FX market (standard deviation of daily % changes in RSD) (daily averages, in paras) ' Chart Chart Current account deficit* Net foreign direct investments* (EUR bn) (% of GDP) (EUR bn) (% of GDP) EUR bn (lhs) % of GDP** (rhs) EUR bn (lhs) % of GDP** (rhs) * Starting from 27 data on exports and imports of goods and services are shown in accordance with BPM6. Data for 25 and 26 are shown * Starting from 27 data on exports and imports of goods and services are shown in accordance with BPM6. Data for 25 and 26 are shown according to BPM5. according to BPM5. ** Ratio of 4Q moving sums, NBS estimate for Q2. ** Ratio of 4Q moving sums, NBS estimate for Q2. Source: Statistical Office of the Republic of Serbia and NBS. Source: Statistical Office of the Republic of Serbia and NBS. 61

68 62

69 6. Macroeconomic environment 6.3. FX reserves adequacy indicators 63

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71 Chart Chart 6.4. Coverage of imports by FX reserves Coverage of short-term external debt at remaining maturity by FX reserves (mos of imports) (%) IV IV IV IV IV IV IV I II IV IV IV IV IV IV IV I II Gross FX reserves Net FX reserves Gross FX reserves Net FX reserves Critical boundary Critical boundary Chart Chart Coverage of high-power (H) money by FX reserves (%) (%) Coverage of M1 monetary aggregate by FX reserves IV IV IV IV IV IV IV I II IV IV IV IV IV IV IV I II Gross FX reserves Net FX reserves Gross FX reserves Net FX reserves 65

72 66

73 6. Macroeconomic environment 6.4. Indebtedness of the Republic of Serbia 67

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75 Chart Chart Fiscal result Public revenues and expenditures (% of GDP) (% of GDP) (% of GDP) I III I III I III I III I III I III I III I III I '13 '14 '15 Public revenues (lhs) Public expenditures (lhs) Fiscal deficit (rhs) Source: NBS according to MoF data. Source: NBS according to MoF data. Chart Chart Public debt dynamics Public debt to GDP (% of GDP) (EUR bn) (%) I III I III I III I III I III I III I III I III I '13 '14 '15 Public debt to GDP ratio (lhs) Public debt level (rhs) Source: NBS according to MoF data. Source: NBS according to MoF data. Chart Chart Public debt by currency Public debt by original maturity (%) (%) I III I III I III I III I III I III I III I III I '13 '14 '15 Public debt denominated in RSD Public debt denominated in other currencies Source: Ministry of Finance of the Republic of Serbia Long-term debt Short-term debt from Dec w T-bills are included in Short-term debt Source: Ministry of Finance of the Republic of Serbia. 69

76 Chart Chart 6.5. Public debt by remaining maturity Internal and external component of public debt (%) (%) I III I III I III I III I III I III I III I III I '13 '14 '15 Long-term debt Short-term debt External debt Internal debt Source: Ministry of Finance of the Republic of Serbia. Source: Ministry of Finance of the Republic of Serbia. Chart Government securities portfolio holder structure (primary market data) (%) (EUR bn) Non-residents on foreign capital market (lhs) Non-residents on domestic capital market (lhs) Residents on domestic capital market (lhs) GovSec issued in FCY (rhs) GovSec issued in RSD (rhs) Source: Ministry of Finance of the Republic of Serbia. 7

77 7. Financial markets and real estate market 71

78

79 Chart 7.1. Chart 7.2. Primary market demand for RSD government bonds Realisation rate and foreign investors' share in auctions of RSD government bonds (primary auction) (RSD bn) (RSD bn) (%) Market value of sold bonds (lhs) Bid-to-cover ratio (rhs) Total nominal value for sale (lhs) Realization rate (rhs) Foreign investors' share (rhs) Source: Ministry of Finance of the Republic of Serbia. Source: Ministry of Finance of the Republic of Serbia. Chart 7.3. Chart 7.4. Interest rates on treasury bills, primary market Interest rates on zero coupon RSD government (monthly averages, %) securities (auctions, weighted monthly averages, %) M treasury bills 6M treasury bills Key policy rate BELIBOR 3M BELIBOR 6M М 6М 12M 18M 24M Total Source: Ministry of Finance of the Republic of Serbia. Source: Ministry of Finance of the Republic of Serbia. Chart 7.5. Chart 7.6. Foreign investors' share at RSD government RSD government securities, outstanding stock bond auctions (nominal value) (by maturity, averages) (RSD bn) Y 18M 2Y 3Y 5Y 7Y 1Y I 212 II 212 III 212 IV 213 I 213 II 213 III 213 IV 214 I 214 II 214 III 214 IV 215 I 215 II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II M 6M 1Y 18M 2Y 3Y 5Y 7Y 1Y 1,6 1,4 1,2 1, Source: Ministry of Finance of the Republic of Serbia. Source: Ministry of Finance of the Republic of Serbia. 73

80 Chart 7.7. Chart 7.8. Primary market of RSD government bonds investors structure (nominal values) (RSD bn) (%) (EUR mn) Foreign investors (lhs) Domestic banks (lhs) Others (lhs)* Foreign investors (rhs) Domestic banks (rhs) * Custodian banks, insurance co, VPF, natural pers. and other legal ent. Source: Ministry of Finance of the Republic of Serbia Euro-denominated government bonds, outstanding stock 2,5 2, 1,5 1, 5 I II III IV I II III IV I II III IV I II III IV I II Y 18M 2Y 3Y 15Y 5Y 1Y Source: Ministry of Finance of the Republic of Serbia. Chart 7.9. Chart 7.1. RSD government bonds, annual turnover (RSD bn) (%) Turnover (lhs) Turnover ratio (rhs) Maturity of RSD government securities until 219 (securities issued up to , nominal value of the stock outstanding, RSD bn) '16 '17 '18 '19 '2 '21'22' Source: Ministry of Finance of the Republic of Serbia. Source: Ministry of Finance of the Republic of Serbia. Chart Chart Belgrade Stock Exchange market capitalisation Belgrade Stock Exchange equity market turnover (RSD bn) (%) (RSD bn) (%) 1,6 1,4 1,2 1, Bonds (lhs) Shares (lhs) Market capitalisation to GDP (rhs) Monthly block trades (lhs) Monthly turnover without block trades (lhs) Monthly turnover ratio (rhs) Source: Belgrade Stock Exchange and National Bank of Serbia. Source: Belgrade Stock Exchange. 74

81 Chart Chart Stock markets' indices (index, = 1) Frozen foreign currency savings bonds turnover (EUR mn) Source: Bloomberg. BELEX15 CROBEX BUX S&P5 DAX Over-the-counter market Belgrade Stock Exchange Source: Central Sec. Deposit. and Clear. House and BSE Chart Chart Real estate index DOMex Indices of the number of newly issued building (index, average = 1) permits (index, 214 = 1) I III I III I III I III I III I III I III I ' Serbia Belgrade region (Belgrade) South Bačka region (Novi Sad) Nis region (Nis) Šumadija region (Kragujevac) Total Residential Other buildings Source: National Mortgage Insurance Corporation. Source: Statistical Office of the Republic of Serbia. Chart Price-to-income (in number of years) I III I III I III I III I III I III I III I III I '15 Housing availability indicator Average value Source: NBS, base on SO and NMIC data. 75