Serbian banks move into a more selective corporate lending phase as costs and uncertainty rise

Serbian banks have begun to recalibrate corporate credit risk as higher funding costs, macroeconomic uncertainty and more cautious risk perception start to influence lending policy across the sector. In the first quarter of 2026, lenders modestly tightened standards for corporate borrowers, initiating what the National Bank of Serbia (NBS) describes as the first broad-based tightening cycle for businesses in more than a year.

Tightening concentrated in long-term corporate loans

Based on the latest NBS banking survey, the tightening was concentrated primarily in long-term dinar and foreign-currency corporate loans. By contrast, standards for short-term borrowing were largely unchanged. Banks reported stricter conditions across companies of all sizes, including agricultural borrowers, pointing to a more cautious approach toward medium-term credit exposure.

From competition-driven easing to cost- and risk-led caution

The change follows an extended period of aggressive competition among banks that had supported easier financing for Serbian businesses despite elevated regional inflation and tighter European monetary conditions. Now, lenders indicate that higher funding costs and deteriorating assessments of the broader economic environment have become the dominant factors shaping credit policy.

Corporate loan demand softens at the start of 2026

Alongside tighter supply-side standards, demand for corporate borrowing weakened during January–March. Financial institutions reported lower interest from businesses across nearly all major loan categories. Banks largely attributed this to seasonal effects, weaker investment activity and more cautious corporate liquidity management during the opening quarter.

Expectations point to recovery without another near-term tightening round

Even with softer first-quarter dynamics, Serbian lenders expect corporate loan demand to recover during the second quarter as infrastructure investment, energy projects and working-capital needs gradually increase ahead of the summer construction and industrial cycle. At the same time, banks do not currently anticipate another major tightening round for corporate lending standards in the near term.

A widening gap between business and household credit

The survey also highlights a growing divergence between corporate and household lending conditions. While banks tightened financing for businesses, retail lending standards continued easing during the first quarter—particularly for dinar cash loans and refinancing products. Household demand for loans rose across most consumer categories, supported by wage growth and strong domestic consumption trends.

Why it matters: differentiation is likely to deepen

This dual-track pattern reflects a structural shift within Serbia’s banking sector. Consumer financing is generating relatively stable short-duration margins with lower capital intensity, while corporate lending faces higher regulatory scrutiny, greater sectoral risk differentiation and uncertainty tied to an expected European economic slowdown. The survey also points to risks linked to energy-transition costs and CBAM-related industrial pressures.

The potential implications could be significant for export-oriented manufacturers and energy-intensive industries that may face rising financing requirements connected to decarbonization efforts—such as energy-efficiency upgrades and carbon-compliance investments—ahead of the European Union’s full CBAM implementation framework later this decade.

Selective credit phase emerging under multiple constraints

Banks operating in Serbia are balancing competing priorities: sustaining loan growth while managing liquidity costs, protecting asset quality and preparing for rising environmental and transition-risk expectations embedded into European banking supervision frameworks. Overall, the NBS survey suggests Serbian banking markets are moving gradually into a more selective credit phase—one where capital availability remains strong overall but long-term financing conditions for industrial and investment-heavy sectors may become increasingly differentiated based on sector exposure, export structure, energy intensity and perceived macroeconomic resilience.