Some bankers expect the Government and CBCG to improve the business environment, they announce stricter lending conditions. The state’s decision to establish a credit guarantee scheme can open up additional space for banks to direct additional resources to strengthening small and medium-sized enterprises.
Citizens and the economy cannot expect cheaper interest rates on loans in 2024 due to movements on the European money market and the high costs of interbank borrowing, as well as increasing regulatory charges against banks that significantly narrow the space for supporting the economy and make financing more expensive.
The presidents of the boards of directors of Universal Capital Bank (UCB) and Crnogorska komercijalna bank (CKB), Milos Pavlovic i Tamas Kamarasi, emphasize that they hope that there will be more good projects this year that they can support, and that the state’s decision to establish a credit guarantee scheme can open up additional space for banks to direct additional resources to strengthening small and medium-sized enterprises
Representatives of the banking sector estimate that there will be a decrease in the share of housing loans in total loans, and they expect from the Government greater political stability and progress in overcoming recognized business barriers, especially in the context of strengthening the rule of law and increasing the efficiency of state institutions. They also believe that the Central Bank (CBCG) can help in improving the business environment with more innovative solutions if it would step forward more boldly in the direction of innovation and European solutions, but adapted to the Montenegrin market.
Narrowed space for cheaper products
The President of the UCB Board of Directors Miloš Pavlović hopes that in 2024 there will be more good projects that he will be able to support and indicates that this year will be no less challenging than the previous one in terms of global economic trends, of which to a large extent the conditions and scope of investments and support from financial institutions also depend.
When asked whether it is realistic to have stronger lending with cheaper interest rates, he said that his expectations are that the trend started in 2023 will continue in the coming years – more expensive financing and stricter lending conditions.
“I do not expect a reduction in the reference interest rate of the European Central Bank (ECB) in 2024, at least not in the first half of the year. At best, I expect her to remain dormant. However, it is not only the costs of interbank borrowing that burden and increase the cost of financing the economy and consumption. No less significant burdening factors are the growing regulatory levies against banks, which significantly narrow the space for supporting the economy and make financing more expensive. I would mention only a few, such as, for example, the classification of the financing of the construction industry (as one of the industries that most significantly and widely affects the eventual growth of GDP, directly or indirectly) as financing of speculative activity, which strongly demotivates such arrangements considering the impact that these arrangements have on the capital of banks”, Pavlović pointed out, adding numerous levies for investment in information infrastructure and business compliance with increasingly numerous and complex regulations.
