Serbia’s corporate lending pivots toward working-capital funding as uncertainty rises

Serbia’s corporate lending story is no longer just about whether credit is expanding; it is increasingly about what companies are using that credit for. Even with macroeconomic indicators remaining relatively stable, the structure of borrowing points to a more cautious, liquidity-first approach—one that investors should read as a sign of stress beneath the surface.

National Bank of Serbia data shows corporate lending continued expanding through 2025 and into early 2026, supported by lower borrowing costs, eased lending standards and still-solid banking-sector liquidity. Corporate loans rose around 7–8% year-on-year, while total domestic lending to the non-monetary sector maintained double-digit growth rates.

Working-capital loans lead new borrowing

The composition of growth has become the key signal. The strongest expansion has come from liquidity and working capital loans rather than purely long-term expansion financing. According to NBS lending reports, working-capital financing was the dominant driver of new corporate borrowing during both Q1 and Q2 2025, materially outpacing export financing and several productive investment categories.

This pattern aligns with pressures now affecting Serbian industry. Many firms continue to face elevated operating costs tied to energy, imported raw materials, wage growth and logistics expenses. At the same time, European industrial demand—particularly from Germany and the automotive supply chain—remains softer than during the post-pandemic recovery period. In that environment, companies are borrowing not only to expand but increasingly to stabilize cash flow, finance inventories and preserve operational flexibility.

Divergence across sectors—and energy remains a priority

The data also highlights a widening divergence between sectors. Trade companies remain among the largest borrowers, followed by manufacturing, construction and real estate businesses—sectors that absorb much of banking liquidity because they sit close to Serbia’s domestic consumption cycle and infrastructure expansion model.

Energy-related borrowing remains strategically important as well. Earlier 2025 lending data pointed to strong demand from energy-sector companies tied to Serbia’s broader transformation in electricity, renewables and industrial infrastructure. Renewable energy projects, grid investments, industrial energy-efficiency upgrades and balancing infrastructure increasingly require bank financing—especially as Serbia moves deeper into the CBAM-era industrial transition.

Dinarization improves stability, but euro-linked debt still dominates

One of the most important structural developments is the continuing increase in dinar lending. The National Bank has been encouraging dinarization through regulatory measures and capital adequacy incentives. As a result, dinar corporate lending continued rising while FX-indexed borrowing slowed or declined in several periods.

For financial stability, this matters because Serbia’s banking system has historically operated with high euroization levels, leaving corporates exposed to exchange-rate risk and imported monetary conditions linked to EURIBOR movements. Expanding dinar lending reduces systemic currency exposure and gives the National Bank greater control over domestic monetary transmission.

Even so, euro-linked financing continues to dominate overall corporate borrowing: roughly 79% of FX-indexed corporate loans remain linked to EURIBOR benchmarks. That means Serbian corporates remain indirectly exposed to broader European interest-rate conditions even as domestic monetary conditions stabilize.

Lower rates support demand—but financing is still costlier than pre-2022

Borrowing costs have improved compared with the peak tightening cycle. Average interest rates on dinar corporate loans declined toward approximately 6.5–6.7%, while euro-denominated corporate lending costs moved closer to around 5% during 2025. Lower ECB rates and earlier NBS monetary easing gradually fed through into corporate financing conditions and helped sustain loan demand.

Still, financing remains substantially more expensive than during the pre-2022 ultra-cheap liquidity era. That shift is particularly relevant for capital-intensive sectors such as renewable energy, heavy industry, logistics infrastructure and manufacturing expansion—areas where projects previously supported by near-zero European interest rates must now operate under higher structural financing assumptions.

Banks look resilient as credit growth stays conservative

The enterprise profile behind lending is also changing. Micro, small and medium-sized enterprises account for around 60% of total corporate lending exposure, but large enterprises increasingly dominate incremental borrowing growth. The shift reflects growing concentration of investment activity among larger industrial groups and infrastructure developers with stronger collateral positions—an outcome consistent with banks favoring borrowers with steadier cash flow visibility or export exposure in a more uncertain macroeconomic environment.

At the same time, Serbia’s banking system remains exceptionally stable by regional standards. Non-performing loans in the corporate sector fell toward historic lows near 1.6–2.3%, while capital adequacy ratios stay above 21%, far exceeding regulatory minimums. Strong liquidity buffers and robust capital coverage help explain why banks can continue funding both corporate activity and infrastructure despite external volatility.

What comes next depends on Europe

Looking ahead, direction will likely be driven more by external European conditions than purely domestic demand. Because Serbia’s corporate sector is deeply integrated into EU industrial supply chains—and because EU decarbonization programs can influence infrastructure investment—any stabilization in European manufacturing could support a shift back toward expansion financing and productive investment.

If European stagnation deepens instead, working-capital needs and refinancing may continue dominating loan structures—an indication that companies prioritize resilience over aggressive growth plans.

This distinction matters for Serbia’s medium-term economic model: stronger investment-loan growth typically signals industrial modernization, productivity gains and export expansion; stronger working-capital growth often points to businesses managing volatility rather than scaling up capacity. For now, Serbia’s lending market contains elements of both realities simultaneously.