MOSTAR, November 13 (FENA) – Citizens of the Federation of Bosnia and Herzegovina (FBiH) have taken on more debt with banks this year, with a strong increase in housing loans and savings rising by 5.7 percent.
In the first three quarters of this year, the Federation of BiH saw a 5.8 percent increase in non-purpose loans and a 13 percent rise in housing loans compared to the end of 2023, announced the FBiH Banking Agency.
Over the past five years, the general conditions for lending in FBiH have been stable, which has influenced the level of interest rates at which new loans were contracted. As of September 30, 2024, banks in FBiH approved general consumption loans at an average effective interest rate of 7.2 percent, while the average effective interest rate for housing loans was 4.3 percent, the agency told FENA in response to an inquiry about the average rates at which citizens are borrowing (non-purpose and housing loans).
As for overdrafts on current accounts with banks in FBiH, as of September 30, 2024, they total 278 million KM.
When asked about citizens’ savings and whether they have data on the average monthly savings of BiH citizens, the Agency responded that the total deposits of the population with banks in FBiH amounted to 12.6 billion KM as of September 30, 2024, an increase of 5.7 percent compared to the end of the previous year.
Regarding the potential impact of the European Central Bank’s interest rate cuts on the local market, and whether interest rates are expected to decrease, the Agency noted that the reference interest rates set by the European Central Bank should not be directly tied to the determination of interest rates in FBiH.
”In Bosnia and Herzegovina, measures by the entity banking agencies have mitigated or completely prevented a drastic increase in interest rates. Changes have been observed only in loans previously contracted with variable interest rates. In most cases, considering temporary measures, banks have chosen not to raise interest rates by more than 2 percent (200 basis points), or significantly lower than the reference rate set in contracts,” the FBiH Banking Agency emphasized.
They further added that for these loans, a reduction in interest rates could be expected when the reference rate to which they are tied falls below 2 percent.
Regarding fees that customers pay to banks, and whether there will be any increase or cancellation of certain fees, the Agency stressed that it does not have the authority to directly influence the amount of specific fees.
Given current market trends, the structure, and the growing volume of services provided, the Agency believes there are conditions for the adjustment of banks’ pricing policies.
