The average loan amount per capita stands at €3,292, which is €500 higher than in January of last year. Loans to legal entities have also increased by 10%, while interest rates have decreased from 8.79% in March of last year to 6.82% in January.
Profit is the main driver of banks’ operations, according to economic analyst Predrag Zečević.
“If you look at the structure of these loans, you’ll see that they are mostly short-term and unfavorable loans. Banks simply do not finance development projects or projects that benefit the state, local communities, and municipalities. They exclusively finance short-term loans in the form of consumer loans for purchasing apartments, cars, etc. For this reason, the government decided to establish a Development Bank to finance exactly those types of projects that commercial banks do not,” Zečević explained.
From the perspective of entrepreneur Predrag Leković from Porto Montenegro, the stable business environment facilitated by banks looks like this:
“Banks in Montenegro definitely need to invest more in business. Credit cards, cash consumption—this is easy for them to make the most profit from, with the highest interest rates. Why would they bother financing a hotel worth €20 million?” Leković said.
The fact that another bank is on the horizon indicates that banks can still profit from the small Montenegrin market because there is a significant amount of money in circulation, Zečević remarked.
“We are approaching a record €6 billion in deposits, which is an absolute all-time high. This means that banks have realized they can earn well with such interest rate differences or high fees. I think any bank, except for one that I understand has applied to the central bank, would have joined the system,” Zečević said.
Montenegro currently has 11 banks, all of which posted profits exceeding €160 million last year. The role of the Central Bank is to ensure a stable banking system, according to Deputy Governor Nikola Fabris.
