Montenegro’s banking sector approved more than €1.07 billion in new loans in the first five months of 2026, with new lending increasing 10.8% year on year by the end of May. The average weighted effective interest rate on newly approved loans was 5.98%, keeping the average cost of fresh borrowing close to 6%.
Businesses received €525.5 million in new loans during the period, representing an annual increase of 4.3%. Household borrowing amounted to €442.8 million, up 1.7%, according to Ministry of Finance data. The pace of new lending differs from the growth recorded in outstanding corporate and household loan portfolios. The total loan books for both sectors have been expanding considerably faster than the annual growth rate of newly approved lending reported for the period.
The Ministry of Finance report does not provide sufficient detail to establish the reasons for the difference. Possible factors include repayment schedules, loan maturities, refinancing activity and differences in the timing of loan approvals and portfolio reporting. The volume of new credit nevertheless places commercial banks among the important channels through which financing reaches Montenegro’s companies and households.
This role has become more significant as net foreign direct investment has declined from a year earlier, increasing the relative importance of domestic credit in financing economic activity. The 5.98% average effective interest rate also represents a key financing benchmark for investment and household purchasing decisions. Borrowers using bank financing need to generate sufficient economic value to cover costs around that level, while the actual interest rate varies according to the borrower and type of loan. New lending is therefore expanding despite financing costs that remain relatively substantial rather than being supported by exceptionally low borrowing rates.
