Montenegro’s banks had a record 5.94 billion euros in outstanding loans as deposits reached an all-time high of 6.53 billion euros, narrowing the deposit surplus to about 590 million euros. Central Bank of Montenegro figures show lending has grown much faster than deposits over the past three years, making deposit funding increasingly important to the pace of credit growth.
Since October 2023, loans have risen about 48%, or nearly 2 billion euros, while deposits grew 18%, or about 1 billion euros. The gap between deposits and loans fell from about 1.5 billion euros in October 2023 to 1 billion euros in October 2024 and 740 million euros a year later. The latest surplus implies a loan-to-deposit ratio of about 91%.
The narrowing surplus does not indicate an immediate liquidity crisis: the banking system remains highly liquid and non-performing loan ratios have stayed relatively low. It does show that credit demand is absorbing a larger share of available deposits. Sustaining lending growth will depend increasingly on banks mobilising deposits, managing funding costs and maintaining prudent lending standards.
Household borrowing drives credit growth
Loans to individuals rose from about 1.66 billion euros in October 2023 to 2.66 billion euros. Stronger demand for mortgages, cash loans and other consumer financing contributed to the increase. New housing loans totalled about 195 million euros in the first nine months of 2026, compared with 78 million euros in the same period of 2023.
New cash loans also increased, reaching about 440 million euros in the first nine months of 2026, up from 228 million euros in the corresponding period of 2023. Corporate demand for liquidity, refinancing and investment loans has risen as well, adding to demand for bank credit.
Long-term deposits remain limited
Household deposits totalled about 2.65 billion euros, including 428 million euros in term accounts. Savings with maturities exceeding one year amounted to about 230 million euros, or 8.6% of household deposits. The rest was concentrated in short-term or demand accounts, many of which can be withdrawn immediately, creating a funding-structure challenge for banks.
Banks have responded by offering higher returns on longer-term savings. The average rate on deposits with maturities between one and three years rose from 1.36% in September 2023 to 2.07% in September 2026. Meanwhile, the average effective rate on newly approved loans declined from 7.05% to 6.33%.
The difference between those deposit and loan rates narrowed from 5.69 to 4.26 percentage points, indicating stronger competition for funding alongside lower borrowing costs. The averages are not a direct measure of individual banks’ net interest margins.
Restrictions adopted by the Central Bank of Montenegro on household debt-service ratios and mortgage loan-to-value levels will take effect in January 2027 and may moderate some borrowing demand. The banks remain financially strong, but further credit expansion will require closer management of deposit maturities, interest-rate competition and borrowers’ ability to service debt.
