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 Third Quarter 217 December 217

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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 13 Chart Non-performing loans coverage quarterly 13 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 (prior to introduction of Basel II) quarterly 14 Chart 2.2. Risk profile of off-balance sheet assets (prior to introduction of Basel II) quarterly 14 Chart Risk profile of assets (prior to introduction of Basel II) quarterly 14 Chart Risk profile of credit risk-weighted assets (in accordance with Basel II) quarterly 14 Chart Funding sources quarterly 14 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 19 Chart Cost-to-income ratio quarterly 19 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 2 Chart 2.4. Interest rates on RSD saving deposits monthly 2 Chart Interest rates on EUR saving deposits monthly Liquidity Chart LTD ratio monthly 23 Chart Average monthly liquidity ratio monthly 23 Chart Average monthly narrow liquidity ratio monthly 23 Chart Liquid assets monthly 23 Chart Household and corporate deposits to monetary aggregates monthly 23 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 risk ratio quarterly 27

4 3. Non-banking financial sector 3.1. Insurance sector Chart 3.1. Total premium per capita at certain date 31 Chart 3.2. Total premium to GDP at certain date 31 Chart 3.3. Total property insurance premium annually 31 Chart 3.4. Ownership structure of insurance companies at certain date 31 Chart 3.5. Coverage structure of technical reserves in life insurance at certain date 31 Chart 3.6. Coverage structure of technical reserves in non-life insurance at certain date 31 Chart 3.7. Profitability indicators for life insurance companies annually 31 Chart 3.8. Profitability indicators for non-life insurance companies annually 31 Chart 3.9. Combined insurance ratio quarterly Voluntary pension funds sector Chart 3.1. Total VPF net assets and index FONDex monthly 35 Chart Net assets growth and net contributions to VPF quarterly 35 Chart VPF asset structure at certain date Leasing sector Chart Investment structure by lessee at certain date 39 Chart Investment structure by leasing object at certain date Corporate sector Chart 4.1. Industrial production index quarterly 43 Chart 4.2. Real growth of corporate loans monthly 43 Chart 4.3. Currency structure of domestic corporate loans quarterly 43 Chart 4.4. Enforced collection quarterly Household sector Chart 5.1. Consumer prices and net household earnings monthly 47 Chart 5.2. Household loans growth monthly 47 Chart 5.3. Currency structure of household loans monthly 47 Chart 5.4. Structure of household savings quarterly 47 Chart 5.5. Contributions to real growth of FX savings monthly 47 Chart 5.6. Contributions to real growth of RSD savings monthly 47 Table 5.1. Household sector performance indicators quarterly Macroeconomic environment 6.1. International macroeconomic environment Chart 6.1. Regional sovereign credit ratings dynamics monthly 51 Chart 6.2. Sovereign credit ratings dynamics of home countries of banks whose subsidiaries operate in monthly 51 Serbia Chart 6.3. CDS spreads on bonds of home countries of parent banks whose subsidiaries operate in Serbia monthly 51 Chart 6.4. CDS spread on Greek bonds daily 51 Chart 6.5. Sovereign bond yields: Serbia and CEE region daily 51 Chart 6.6. Sovereign bond yields: Serbia and home countries of parent banks whose subsidiaries operate in daily 51 Serbia Chart 6.7. Greek bond yield daily 51 Chart 6.8. Emerging Market Bond Index: Serbia and EMBI Global monthly 51 Chart 6.9. Emerging Market Bond Index: Serbia and CEE countries monthly 52 Chart 6.1. ECB interest rates and EONIA daily 52 Chart Risk premium on the interbank money market monthly 52 Chart Inflation in the eurozone monthly 52 Chart CDS spreads on bonds issued by Greek parent banks whose subsidiaries operate in Serbia daily 52 Chart CDS spreads on bonds issued by Italian parent banks whose subsidiaries operate in Serbia monthly 52 Chart CDS spreads on bonds issued by Austrian parent banks whose subsidiaries operate in Serbia monthly 52 Chart CDS spreads on bonds issued by French parent banks whose subsidiaries operate in Serbia monthly 52 Chart Stock price dynamics of Greek parent banks whose subsidiaries operate in Serbia daily 53 Chart Stock price dynamics of Italian parent banks whose subsidiaries operate in Serbia daily 53 Chart Stock price dynamics of Austrian parent banks whose subsidiaries operate in Serbia daily 53 Chart 6.2. Stock price dynamics of French parent banks whose subsidiaries operate in Serbia daily 53 Chart Ownership structure of banks in Serbia quarterly 53 Chart BIS member banks` gross exposure towards emerging markets quarterly 53

5 6.2. Domestic macroeconomic environment Chart Contributions to real GDP growth by production-side components quarterly 57 Chart Contributions to real GDP growth by expenditure-side components quarterly 57 Chart Industrial production index monthly 57 Chart Unemployment rate quarterly 57 Chart Consumer price index monthly 57 Chart Contributions to CPI changes monthly 57 Chart NBS key policy rate and BEONIA daily 57 Chart M money-market interest rates monthly 57 Chart BELIBOR interest rates monthly 58 Chart Exchange rate dynamics of national currencies against the euro daily 58 Chart Dynamics of the RSD exchange rate against EUR, CHF and USD monthly 58 Chart Dynamics of the RSD exchange rate against EUR and NBS interventions on the interbank FX monthly 58 market Chart Volatility of the exchange rate monthly 58 Chart Bid-ask spread on the interbank FX market daily 58 Chart Current account deficit quarterly 58 Chart Net foreign direct investments quarterly FX reserves adequacy indicators Chart Coverage of imports by FX reserves quarterly 61 Chart 6.4. Coverage of short-term external debt at remaining maturity by FX reserves quarterly 61 Chart Coverage of high-power (H) money by FX reserves quarterly 61 Chart Coverage of M1 monetary aggregate by FX reserves quarterly Indebtedness of the Republic of Serbia Chart Fiscal result monthly 65 Chart Public revenues and expenditures quarterly 65 Chart Public debt dynamics quarterly 65 Chart Public debt to GDP monthly 65 Chart Public debt by currency quarterly 65 Chart Public debt by original maturity monthly 65 Chart Public debt by remaining maturity monthly 65 Chart 6.5. Internal and external component of public debt quarterly 65 Chart Government securities sold on the primary market by buyers monthly Financial markets and real estate market Chart 7.1. Primary market demand for RSD government bonds monthly 69 Chart 7.2. Realisation rate and foreign investors` share in auctions of RSD government bonds monthly 69 Chart 7.3. Interest rates on treasury bills, primary market monthly 69 Chart 7.4. Interest rates on zero coupon RSD government securities monthly 69 Chart 7.5. Foreign investors` share at RSD government bond auctions quarterly 69 Chart 7.6. RSD government securities, outstanding stock quarterly 69 Chart 7.7. RSD government bonds investors structure monthly 69 Chart 7.8. Euro-denominated government bonds, outstanding stock quarterly 69 Chart 7.9. RSD government bonds, annual turnover monthly 7 Chart 7.1. Maturity of RSD government securities monthly 7 Chart Belgrade Stock Exchange market capitalisation quarterly 7 Chart Belgrade Stock Exchange equity market turnover monthly 7 Chart Stock markets' indices daily 7 Chart Real estate index DOMex quarterly 7 Chart Indices of the number of newly issued building permits monthly 7 Chart Price-to-income quarterly 7 Definitions 72

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7 1. Financial soundness indicators 1

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9 Chart 1.1. Financial soundness of Serbian banking sector 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, 215 Region, 215 CAR ROE C/A ROA NPL Provisions/NPL Serbia, 216 Region, 216 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 I 217 II 217 III 217 Regulatory capital to risk weighted assets Tier I capital to risk weighted assets 1) Balance sheet capital to balance sheet 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 balance sheet assets Liquid assets to short-term liabilities Liquid assets (core) to total balance sheet 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 nonpublic sector FX denominated and FX-indexed loans to FX denominated and FX-indexed deposits Deposits to total balance sheet assets FX denominated and FX-indexed liabilities to total liabilities Sensitivity to Market Risk Net open FX position (overall) to regulatory capital Оff-balance sheet items to total balance sheet 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- BB- BB- BB- Fitch BB- BB- BB- BB- BB- BB- B+ B+ BB- BB- BB- BB- Moody's B1 B1 B1 B1 Ba3 Ba3 Ba3 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 Gross international reserves n/a Net international reserves n/a 1) 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. 5

12 Table 1.2. Serbia: Financial sector structure No Q1 217 Q2 217 Q3 217 Assets Assets Assets Assets Assets Assets Assets Assets Assets No. No. No. No. No. No. No. No. RSD billion % RSD billion % RSD billion % RSD billion % RSD billion % RSD billion % RSD billion % RSD billion % RSD billion % Financial sector 87 2, , , , , , , , ,634 1 (in % of GDP)* 84.2% 86.7% 79.5% 82.6% 82.3% 84.7% 83.5% 83.1% 83.9% 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 Preliminary Q3 217 GDP datum. 6

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 III I III I III Capital adequacy ratio Basel standard III I III I III I III I III I III I III I III I III I III * 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 III I III I III 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 III I III I III 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 III I III I III 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 III I III I III 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. Chart 2.7. Leverage indicators (%) l III I III I III I III I III I III I III I III I III I III Regulatory capital to total assets Capital to assets 9

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

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19 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) (%) 2, 1,8 1,6 1,4 1,2 1, III I III I III I III I III I III I III I III I III I III FX-claims on households (lhs) Dinar claims on households (lhs) FX- claims on enterprises (lhs) Dinar claims on enterprises (lhs) Total FX-claims to total claims (rhs) ,8 1,6 1,4 1,2 1, III I III I III I III I III I III I III I III I III I III 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 structure (September 217, %) Non-performing loans (share in total gross loans, %) Real estate: 9% Education, health and social care: % Other: 5% Agriculture, forestry and fishing: 7% Mining, manufacturin g: 29% 25 2 Transportatio n: 13% Trade: 29% Construction: 7% Electricity: 1% III I III I III I III I III I III I III I III I III I III Chart Chart Non-performing loans to capital (%) III I III I III I III I III I III I III I III I III I III Net NPLs totier 1 Net NPLs to regulatory capital Net NPLs to capital Non-performing loans coverage (%) III I III I III I III I III I III I III I III I III I III Allowances for impairment of NPLs to NPLs Calculated reserve for estimated BS* losses to NPLs Calculated reserve for estimated losses to NPLs * Balance sheet. 13

20 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 III I III I III 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 III I III I III Chart Chart Risk-weighted assets and total assets growth (index, September 28 = 1) Risk profile of balance sheet assets (prior to introduction of Basel II) (%) III I III I III I III I III I III I III I III I III I III 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. 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 sheetassets, 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 (in accordance with Basel II) (%) (RSD bn) (%) IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III Weight % Weight 1% Weight 2% Weight 35% Weight 5% Weight 75% Weight 1% Weight 15% 3,2 2,8 2,4 2, 1,6 1,2 8 4 I III I III I III I III I III I III I III I III I III I III Liabilities (lhs) Equity (lhs) Liabilities to total sources (rhs)

21 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 Foreign assets Claims on government Claims on NBS Claims on other sectors Other assets III I III I III I III I III I III I III I III I III I III Foreign liabilities Total deposits Еquity and reserves Other Chart Off-balance sheet assets: contingent liabilities (%) III I III I III I III I III I III I III I III I III I III Contingent liabilities to total off-balance sheet assets Capital to contingent liabilities 15

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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 III I III I III '15 '16 '17 ROA ROE III I III I III I III I III I III I III I III I III I III '15 '16 '17 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 III I III I III '15 '16 '17 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 III I III I III '15 '16 '17 Other* Net income from fees and commissions Net interest margin Chart Chart Contributions to net operating income growth (y-o-y growth, pp) III I III I III I III I III I III I III I III I III '15 '16 '17 Other* Net income from fees and commissions Net interest margin Net operating income growth * Net income from the trade in securities and dividend income. Gain/loss before taxes (annualized) (RSD bn) Loss of Agrobanka: 29.7 RSD bn III I III I III I III I III I III I III I III I III I III '15 '16 '17 Gain Loss Net gain 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 '15 '16 ' III I III I III I III I III I III I III I III I III I III '15 '16 '17 Range by banks* Banking sector * Excluding 5% of largest observations. 19

26 Chart Chart Banks w/ Cost-to-income ratio above 8% (number of banks) (%) (%) III I III I III I III I III I III I III I III I III I III '15 '16 '17 Number (lhs) Market share (rhs)* * Measured by the share in total net assets of the banking sector Selected elements of gain/loss to total assets III I III I III I III I III I III I III I III I III I III '15 '16 '17 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 III I III I III '15 '16 '17 Interest claims/total assets (lhs) Interest liabillities/total liabillities (rhs) '15 '16 '17 Households Enterprises Total Chart Chart 2.4. Interest rates on EUR loans* Interest rates on RSD saving deposits (households and enterprises, new business) (households and enterprises, new business) (%) (%) '15 '16 '17 Households Enterprises Total * EUR-denominated and EUR-indexed loans '15 '16 '17 Households Enterprises Total Chart Interest rates on EUR saving deposits* (households and enterprises, new business) (%) '15 '16 '17 Households Enterprises Total * EUR-denominated and EUR-indexed deposits. 2

27 2. Banking sector 2.4. Liquidity 21

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29 Chart Chart LTD ratio Average monthly liquidity ratio (loans to deposits) ' '17 Range by banks* Banking sector Critical boundary * Excluding 1% largest observations. Chart Chart Average monthly narrow liquidity ratio Liquid assets (%) ' '17 Range by banks* Banking sector Critical boundary * Excluding 1% largest observations 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 Banks` FX-reserves to household and corporate FXdeposits aggregates (%) (%) '17 Deposits/H* Deposits/M1 Deposits/M2 Deposits/M3 * High-power money '17 23

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31 2. Banking sector 2.5. Sensitivity to market risks 25

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33 Chart Quarterly breakdown of the sector's long and short FX position (in EUR) and foreign exchange risk ratio (RSD bn) (%) IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III Long EUR Short EUR FX risk indicator 27

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35 3. Non-banking financial sector 3.1. Insurance sector 29

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37 Chart 3.1. Chart 3.2. Total premium per capita in 216 Total premium to GDP in 216 (USD) (%) 7, 6, 5, 4, 3, 2, 1, Life Non-life Life Non-life Source: sigma world insurance database Source: sigma world insurance database Chart 3.3. Chart 3.4. Total property insurance premium Ownership structure of insurance companies* (EUR m) (September 217, %) Italy 11% Netherlands 22% Other 4% Serbia 27% Slovenia 6% *Тhe Latest Available Data Source: CEA Statistics and National Bank of Serbia. Austria 3% * Does not include reinsurance companies. Chart 3.5. Chart 3.6. Coverage structure of technical reserves in life Coverage structure of technical reserves in non-life insurance* insurance* (September 217, %) (September 217, %) Republic of Serbia Government securities 96% Republic of Serbia Government securities 69% Other 1% Real estate 1% Deposits with banks 2% Other 11% Real estate 6% Deposits with banks 13% 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 * annual data * annual data Return on equity Return on assets 31

38 Chart 3.9. Combined insurance ratio (%) I II III Loss ratio Expense ratio Limit 32

39 3. Non-banking financial sector 3.2. Voluntary pension funds sector 33

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41 Chart 3.1. Chart Total VPF* net assets and index FONDex Net assets growth and net contributions to VPF* (RSD bn) (index, = 1) (RSD m) ,8 2,5 2,2 1,9 1,6 1,3 1, '17 VPF net asset (lhs) FONDex (rhs) * Voluntary pension funds. * 4Q moving sums. The Latest Available Data. 6, 5, 4, 3, 2, 1, -1, '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 I '17 Net contributions Increase from investment Increase in total VPF assets II '17* Chart VPF asset structure (September 217, %) Republic of Serbia Т- bonds 83.7% Deposits 8.6% Other.4% Real estate.2% Shares 7.1% 35

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43 3. Non-banking financial sector 3.3. Leasing sector 37

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45 Chart Chart Investment structure by lessee Investment structure by leasing object (September 217, %) (September 217, %) Other*.4% Companies 83.6% Trucks, buses 35.2% Cars 3.6% Production machinery 3.4% Farmers 3.% Legal entities in bankruptcy.4% Public companies 4.6% Enterpreneurs 4.4% Natural persons 3.2% * Banks, VPF, RS, local government, other residents, nonresidents. Commercial real estate 6.2% Rail vehicles, vessels 6.9% Other 4.3% Construction machinery Equipment for Agricultural equipment 5.4% services 3.% 4.9% 39

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47 4. Corporate sector 41

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49 Chart 4.1. Chart 4.2. Industrial production index Real growth of corporate loans (index, 216 = 1) (y-o-y growth rates, %) ' '17 Mining Manufacturing Domestic loans Electricity, gas, steam, air-conditioning Total corporate loans * Seasonally adjusted data. * Adjusted for exchange rate movements. Cross-border loans Chart 4.3. Chart 4.4. Currency structure of bank claims on corporates Enforced collection (RSD bn) (%) (thousands) (RSD bn) 1,4 1,2 1, IIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIII '17 I III I III I III I III I III I III I III I III I III '17 Other currencies (lhs) CHF (lhs) Number of blocked accounts (lhs)* USD (lhs) EUR (lhs) Amount of money in blocked accounts (rhs) * FX loans to total loans. * End of period

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51 5. Household sector 45

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53 Chart 5.1. Chart 5.2. Consumer prices and net household earnings Household loans growth (index, 215 = 1) (y-o-y growth rates, %) Nominal net wages* 216 '17 Real net wages* CPI * Seasonally adjusted data. * Adjusted for exchange rate movements '17 Nominal loan growth rate Real loan growth rate* Chart 5.3. Chart 5.4. Currency structure of of bank claims on households Structure of household savings (RSD bn) (%) (term and currency structure) (%) 1, '17 Other currencies (lhs) CHF (lhs) EUR (lhs) RSD (lhs) Share of FX loans (rhs)* * Share of FX loans in total loans IIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIII '17 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 (y-o-y growth rates, pp) '17 Long-term FX savings Short-term FX savings Total FX savings growth Contributions to growth of RSD savings (y-o-y growth rates, pp) '17 Long-term RSD savings Short-term RSD savings Total RSD savings growth 47

54 Table 5.1. Household sector performance indicators (%, unless indicated otherwise) Total bank claims on households Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q1 Q2 Q RSD bn 571,2 61,7 652,7 673,7 724,6 759,1 838,7 864,1 883,5 893, EUR m 5.414,3 5.75, , ,2 5.99,6 6.24,9 6.82,8 6.97,3 731,4 7481,5 FX deposits to FX bank claims 1) 72,4 67,4 65, 62,1 59, 57,2 52,8 52,2 5,6 49,2 FX to total deposits 1) 92,4 9,7 92,1 89,4 88,7 87,1 85,1 85,5 85, 85,3 FX deposits to FX loans 1) 177,2 191,2 214,7 223,3 233,4 233,9 24,9 241,2 238,9 243,6 Short-term bank claims to total claims 13,2 12,3 14,3 15,3 9,1 6,2 6,8 6,8 6,5 6,2 LTV ratio 2) 65,4 65,6 65,7 65,9 65,8 68,5 7,2 7,3 71,3 69,8 Av erage loan per resident RSD thousand 76, 81, 88,2 91,4 1,4 15,9 118,5 122,1 124, 126,8 EUR 72,6 773,9 775,7 797,3 83,3 87,4 959,9 985, 126, 162,7 Av erage loan amount RSD thousand 427,6 439,6 46,4 489,9 511,1 472,2 488,7 47,4 465,8 463,6 EUR 452,8 421,4 449, 4273,1 4225,3 3882,5 3957, ,6 3854,3 3883,5 Av erage loan per user RSD thousand 59, 53,9 57,1 612, 644,7 614,6 641, 634,5 63,6 631, EUR 4824,9 573,9 512,9 5338,8 5329,8 553,1 5191,4 5118,1 5218,2 5286, 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 with National Mortgage Insurance Corporation. (last data december 216.) Data download and use allowed. Due to technical reasons, NBS makes no warranties as to the accuracy or completeness of the information. 48

55 6. Macroeconomic environment 6.1. International macroeconomic environment 49

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57 Chart 6.1. Chart 6.2. Regional sovereign credit ratings dynamics Serbia Bulgaria Croatia Hungary Romania Montenegro FYROM Bosnia* Slovenia * Bosnia and Herzegovina. Source: Standard & Poor's. Sovereign credit ratings dynamics of home countries of banks whose subsidiaries operate in Serbia Source: Standard & Poor's. Serbia Austria Italy Greece France Chart 6.3. Chart 6.4. CDS spreads on bonds of home countries of parent banks whose subsidiaries operate in Serbia* (bp) CDS spread on Greek bonds* (bp) 3, 25, 2, 15, 1, 5, Austria Italy France * CDS spreads on five-year dollar bonds. * CDS spreads on five-year dollar bonds. Source: Bloomberg. 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 Hungary Croatia Turkey Poland Serbia Italy France Austria * Мaturity оver 5 years, USD-denominated. * 1 years maturity, EUR-denominated, except RS bonds. Source: Bloomberg. Source: Bloomberg. Chart 6.7. Chart 6.8. Greek bond yield* Emerging Market Bond Index: Serbia and EMBI Global (%) (bp) 4 1,4 35 1,2 3 1, * 1 years maturity, euro-denominated. Source: Bloomberg. Source: J.P. Morgan. EMBI Serbia EMBI Global 51

58 Chart 6.9. Chart 6.1. Emerging Market Bond Index: Serbia and CEE countries ECB interest rates and EONIA (bp) (%) 1,4 6 1,2 1, Serbia Poland Turkey Croatia Hungary Source: J.P. Morgan EONIA Interest rate on lending facility Source: ECB, Bloomberg. ECB key policy rate Interest rate on deposit facility Chart Chart Risk premium on the interbank money market Inflation in the eurozone (3M EURIBOR/EONIA spread, monthly averages, bp) (y-o-y rates) Source: Bloomberg. Source: ECB. Chart Chart CDS spreads on bonds issued by Greek parent banks whose subsidiaries operate in Serbia* (bp) 12, 1, 8, 6, 4, 2, CDS spreads on bonds issued by Italian parent banks whose subsidiaries operate in Serbia* (bp) 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: Bloomberg. Chart Chart CDS spreads on bonds issued by Austrian parent banks whose subsidiaries operate in Serbia* (bp) CDS spreads on bonds issued by French parent banks whose subsidiaries operate in Serbia* (bp) Erste Group Bank AG Raiffeisen Bank International AG Credit Agricole S.A. * CDS spread on 5 year bonds. * CDS spread on 5 year bonds. Source: Bloomberg. Source: Bloomberg. Societe Generale 52

59 Chart Chart Stock price dynamics of Greek parent banks whose Stock price dynamics of Italian parent banks whose subsidiaries operate in Serbia subsidiaries operate in Serbia (index, = 1) (index, = 1) EFG Eurobank Ergasias National Bank of Greece Intesa Sanpaolo S.p.A. UniCredit S.p.A. Source: Bloomberg. Source: Bloomberg. Chart Chart 6.2. Stock price dynamics of Austrian parent banks Stock price dynamics of French parent banks whose whose subsidiaries operate in Serbia subsidiaries operate in Serbia (index, = 1) (index, = 1) Erste Group Bank AG Raiffeisen Bank International Societe Generale Credit Agricole S.A. Source: Bloomberg. Source: Bloomberg. Chart Chart BIS member banks' gross exposure towards Ownership structure of banks in Serbia* emerging markets (%) (index, December 26 = 1) IIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIII ' Greek banks Italian banks French banks Austrian banks Domestic privately owned Domestic publicly owned Other banks Poland Turkey * Share in net assets of the banking sector. *Latest data available. Source: Bank for International Settlements. 1 I II IIIIVI II IIIIVI II IIIIVI II IIIIVI II IIIIVI II IIIIVI II IIIIVI II IIIIVI II IIIIVI II IIIIVI II* Serbia Hungary Romania Bulgaria Croatia Czech Rep. 53

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61 6. Macroeconomic environment 6.2. Domestic macroeconomic environment 55

62 56

63 Chart Chart Contributions to real GDP growth by production-side Contributions to real GDP growth by expenditure-side components components (y-o-y growth rates, pp) (y-o-y growth rates, pp) I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIII* I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIIIIV I IIIII* ' '17 Consumption Investment Contribution of nontradable sectors Contribution of tradable sectors Government Net export Real GDP growth Real GDP growth * NBS estimate. * NBS estimate. Chart Chart Industrial production index Unemployment rate* (index, 216 = 1) (%) II IV II IV II IV II IV I II III IV I II III IV I II III IV I II III '17 * According to the Labour Force Survey. **Latest available data. Source: Statistical Office of the Republic of Serbia. Chart Chart Consumer price index (y-o-y growth rate, %) '17 CPI Inflation target Target bound Contributions to CPI changes (y-o-y growth rates, pp) '17 Food Other goods and services CPI Chart Chart 6.3. NBS key policy rate and BEONIA 3M money-market interest rates (%) (eop, %) BEONIA Key policy rate '17 Interest rate on credit facility Interest rate on deposit facility Source: Bloomberg. 3M LIBOR USD 3M LIBOR CHF 3M EURIBOR 57

64 Chart Chart BELIBOR interest rates Exchange rate dynamics of national currencies against the euro (monthly averages, %) (index, = 1) '17 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, CHF Dynamics of the RSD exchange rate against EUR and and USD NBS interventions on the interbank FX market (index, December 27 = 1) (EUR m) (EUR/RSD) '17 RSD/CHF RSD/USD RSD/EUR '17 NBS interventions - sold (lhs) NBS interventions - bought (lhs) Average exchange rate (rhs) Chart Chart Volatility of the exchange rate (standard deviation of daily % changes in RSD) '17 Bid-ask spread on the interbank FX market (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) 21 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 according to BPM5. * 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. ** Ratio of 4Q moving sums. ** Ratio of 4Q moving sums. Source: Statistical Office of the Republic of Serbia and NBS. Source: Statistical Office of the Republic of Serbia and NBS. 58

65 6. Macroeconomic environment 6.3. FX reserves adequacy indicators 59

66 6

67 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 IV IV I II III Gross FX reserves Net FX reserves Critical boundary IV IV IV IV IV IV IV IV IV I II* Gross FX reserves Net FX reserves Critical boundary * Latest available data 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 IV IV I II III IV IV IV IV IV IV IV IV IV I II III Gross FX reserves Net FX reserves Gross FX reserves Net FX reserves 61

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69 6. Macroeconomic environment 6.4. Indebtedness of the Republic of Serbia 63

70 64

71 Chart Chart Fiscal result* " *Ratio of 12m moving sums. Source: NBS according to MoF data. Public revenues and expenditures* (% of GDP) (% of GDP) (% of GDP) I IIIIIIVI IIIIIVI IIIIIIVI IIIIIIVI IIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIVI IIIIIIVI IIIII Public revenues (lhs) Public expenditures (lhs) Fiscal result (rhs) *Ratio of 4Q moving sums. Source: NBS according to MoF data. Chart Chart Public debt dynamics Public debt to GDP (% of GDP) (EUR bn) (%) I IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIII Public debt to GDP ratio (lhs) Public debt level (rhs) Source: Ministry of Finance of the Republic of Serbia. Source: Ministry of Finance of the Republic of Serbia. Chart Chart Public debt by currency Public debt by original maturity (%) (%) I IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIII 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. Chart Chart 6.5. Public debt by remaining maturity (%) (%) Long-term debt Source: Ministry of Finance of the Republic of Serbia. Short-term debt Internal and external component of public debt I IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIIIIVI IIIII External debt Source: Ministry of Finance of the Republic of Serbia. Internal debt 65