Montenegro’s commercial banks recorded faster credit than deposit growth in August, with lending increasing by 9.8% year on year against a 6.4% rise in deposits. The gap was wider in the second quarter, when credit expanded by 12.6% and deposits by 5.1%.
Deposit growth accelerated during the summer, and the European Commission’s report identifies no immediate liquidity warning. Household deposits remained particularly strong, rising 12.8% year on year in August, while corporate deposit growth recovered to 8.4% after slowing earlier in the year.
Despite the improvement in deposit growth, the continued difference between lending and deposit expansion makes the stability of banks’ funding bases an important consideration as credit demand increases.
The composition of deposits has also changed. Non-resident deposits accounted for 17.7% of total deposits in August, down from 19.4% in January. This reduced share can limit some exposure to external funding movements, while increasing the importance of domestic savings from households and companies.
If lending continues to grow materially faster than deposits, banks could eventually adjust loan pricing or become more selective in extending credit. Maintaining liquidity buffers and underwriting standards will remain important as banks finance investment across the economy.
The current indicators remain positive: deposits continue to increase, non-performing loans are declining, and lending is distributed across household and corporate borrowers. The widening difference between credit and deposit growth nevertheless warrants monitoring as borrowing for infrastructure, property and business investment expands simultaneously.
