Banks are more afraid of risk than the NBS – Economy

In June, the National Bank of Serbia, in an attempt to incentivize the sale of apartments and thus change the construction industry, amended regulations so that banks could offer citizens, first-apartment buyers, a home loan with a 10% stake, twice less than before.

The following day, the state-owned Postal Savings Bank announced that it would offer its customers this opportunity. Both then and now.

The Governor of the National Bank of Serbia, Jorgovanka Tabaković, complained yesterday that the banks did not accept the recommendation to reduce the share of housing loans from 20 to 10 percent.

“Only one bank, a national one, provides a service to citizens to obtain housing loans with a participation of 10, not 20 percent.” Obviously, banks think that they earn enough from other services, but in the long term, that will not be good for banks, because they have to fight for their clients, “said Tabaković.

It is known that banks do not dislike profit and that they would use all kinds of tricks, sometimes on the verge of morale, to reach customers and make money, but it seems that now they do not. Obviously, in the crisis and uncertainty that the corona virus pandemic brings, it is more important for them not to lose than to potentially make money.

Veroljub Dugalić, professor at the Faculty of Economics in Kragujevac and long-term general secretary of the Association of Banks of Serbia, points out that the reason other banks did not accept this recommendation is caution.

“Reducing the loan share from 20 to 10 percent means higher monthly loan installments. Banks are now in a position to consider whether clients will be able to repay it. They wonder who will lose their job, the question of uncertainty. The epidemic continues. and that’s why banks are cautious. In this case, the NBS wants to stimulate the economy and banks want to protect their own interests and those of the shareholders, “says Dugalić.

He points out that the NBS should not be judged because it wants to boost the economy, but also the banks.

“The objective of banks is to make loans. That, in a nutshell, is the meaning of their business. Under normal circumstances, banks go after customers to get a loan.” When the pandemic passes and the situation returns to normal, for Of course, banks will be ready to approve housing loans more easily “, estimates Dugalić, because then there will be less risk, that is, greater security.

Data from the Geodesic Authority of the Republic also show that the NBS measure had no effect. According to the report on the real estate market for the third quarter, in which the recommendation was valid, even the share of purchasing apartments on credit was reduced in relation to cash.

In the first and second quarters, the loan ratio exceeded 45 percent and in the third quarter it fell to 37 percent, the same as in the same period last year.

In absolute terms, the number of apartments sold increased 45% from June to the end of September compared to the previous quarter in which there was a state of emergency, but the number of apartment purchases on credit increased only 18%.

The governor also referred to delinquent loans and said that our country is among the best, because it only has about 3.5 percent of loans with problems.

“The NBS has mechanisms to help banks maintain that level. In addition, we encourage banks to lend the economy in dinars with interest rates practically equal to those of foreign currency loans,” said Tabakovic.

For Dejan Šoškić, a professor at the Faculty of Economics, it is not surprising that banks did not take risks and offered home loans with a lower stake.

“In a crisis, we must not encourage the over-indebtedness of citizens. Reducing participation has the effect of maintaining high levels of real estate prices. It was necessary to drop property prices and then make citizens buy them at that lower price. This does not benefit either the citizens who can buy fewer square meters for the same money, nor the banks to which these loans could potentially represent the growth of non-performing loans in the future. This measure benefits only the producers and sellers of apartments, and in Belgrade the prices are already the same as in Budapest, which is not logical, ”said Soskic.

He points out that there are already loans for housing without participation, and they are loans in dinars, while for loans with an exchange clause participation is required precisely because of the exchange risk.

“The relationship between the size of the debt and the value of the real estate loan is 80 percent (or 20 percent of the share) everywhere, or the relationship is even more rigorous to avoid the creation of real estate price bubbles and so that clients do not borrow excessively. The rule is that the greater the participation, the easier it will be for people to pay the loan “, he concludes.

When asked if that means the state Postal Savings Bank was exposed to risk, Soskic said it depends on the number of loans approved, the number of delinquent loans and other indicators from the bank.

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