Montenegro’s banking sector reported easier corporate lending conditions alongside stronger demand for business financing, with working capital and capital investment accounting for major borrowing needs. The Central Bank of Montenegro’s second-quarter lending survey recorded a net measure of overall corporate lending standards of -15.43%, indicating an easing of conditions. Banks expect lending standards to ease further, with a projected net measure of -14.32% for the third quarter.
The easing was more pronounced for micro, small and medium-sized enterprises, where the net change in lending standards reached -19.91%. Banks attributed the softer lending conditions to stronger competition, more favourable assessments of economic conditions and increased willingness to assume risk. Funding costs and non-performing loans were not identified as significant constraints.
Lending terms also changed during the second quarter. Banks reported lower lending margins, higher maximum loan amounts, longer maturities and easier collateral requirements. The largest movement was recorded in maximum loan amounts, with a net reading of -19.93%. Fees and commissions were the only major lending condition moving in the opposite direction.
At the same time, demand for corporate credit increased by a net 24.03% during the second quarter. Banks expect demand to strengthen further to 25.14% in the third quarter. Demand from SMEs remained strong, while borrowing demand from large companies reached a net 18.90% and is expected to increase further. Working-capital requirements represented the strongest source of corporate loan demand, with a net reading of 24.03% and an expected increase to 25.14% in the third quarter.
Capital investment accounted for another 14.52% of demand. Debt restructuring represented a substantially smaller component and is expected to become almost negligible. The survey also recorded a net 9.20% decline in rejected corporate loan applications. The combination of lower lending margins, larger maximum loan amounts, longer maturities, easier collateral requirements and fewer rejected applications indicates changes across several areas of corporate credit conditions. Montenegro’s banking sector has strong liquidity, while the domestic market has a relatively narrow pool of large companies and investment-ready projects.
The lending conditions reported in the survey cover financing for corporate activity including tourism, renewable energy, logistics, construction, real estate and SME expansion. The survey measures the direction of changes in lending standards and demand rather than actual lending volumes, while banks can continue to apply selective lending criteria as conditions ease.
