Montenegro’s banking sector continued to expand its lending activity in 2026 while maintaining a low level of non-performing loans, with total credit reaching approximately €5.77 billion at the end of May, up 12.3% year on year. Bank lending had stood at around €5.59 billion at the end of the first quarter, while deposits reached approximately €5.92 billion. Total banking-sector assets subsequently increased to about €8.0 billion by May.
Asset quality remained strong alongside the expansion in credit. The non-performing loan (NPL) ratio was approximately 2.4% at the end of March, keeping problem loans near historical lows and leaving banks with stronger balance sheets than during previous credit cycles. Credit expansion is being driven by several areas of economic activity, including household borrowing, property-related activity and corporate investment. Construction activity is expanding, while tourism continues to generate a significant share of domestic income.
Government infrastructure spending is also creating additional financing requirements. The advancement of motorway, railway and other capital projects is generating working-capital and investment-financing needs among companies involved in supplying and executing those projects. The banking system is therefore operating within a broader environment of expanding investment and economic activity. At the same time, the relationship between deposits and lending remains a key feature of the sector’s funding position.
With deposits approaching €6 billion, banks retain a substantial domestic funding base. This provides capacity for further lending growth while limiting the immediate need to increase dependence on wholesale foreign funding and external refinancing. Interest rates, however, remain relatively high in nominal terms. Higher rates support banking-sector revenue but also increase the cost of borrowing for households and companies considering new loans.
The Central Bank of Montenegro is monitoring credit expansion from a macroprudential perspective. Rapid growth in lending, together with rising real-estate prices, has emerged as one of the more visible cyclical risks within the financial system. The current banking figures show continued expansion without a corresponding deterioration in asset quality. The sector has consequently moved from a period focused on balance-sheet repair toward one characterized by balance-sheet growth. At the beginning of this expansion phase, Montenegro’s banks combine double-digit lending growth, strong deposit levels and an NPL ratio of about 2.4%. The quality of loans issued during 2026 and 2027 will determine whether those balance-sheet conditions remain strong as the current investment and property cycles mature.
