The impact of the external factors on the profitability of the banking sector in Serbia

Đuranović, Gordana and Filipović, Sanja (2025) The impact of the external factors on the profitability of the banking sector in Serbia. Ekonomika preduzeća. pp. 283-297. ISSN 0353-443X

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Abstract

The aim of the paper is to determine whether the measures of the National Bank of Serbia (NBS) contributed to the profitability of the Serbian banking sector before and during the crisis caused by two external shocks, the COVID-19 pandemic and the energy crisis triggered by the Russian- Ukrainian conflict. Profitability was analyzed for the whole Serbian banking sector in the period 2019- 3Q2024, using following ratios as a measure of profitability: return on assets (ROA), return on equity (ROE), net interest gain to total revenue, net fees and commissions gain to total revenue ( net fees and commissions income ratio), and net pre-tax profit/loss to total revenue ratio (net pre-tax profit margin), comparing and explaining changes in growth during the observed period. Additionally, to improve research, the Capital adequacy ratio (CAR) and non-performing loans rate (NPL) are included in the analysis, and results show their significant impact on profitability. NLP rate is 2.7% at the end of the period, while CAR is 21.9%, and both values refer to the good quality of the credit portfolio. Results of research showed that the profitability is high with the tendency to grow in the future as well, because external shocks were successfully amortized and profitability increased significantly at the end of the observed period compared to 2019 as a reference year before the beginning of the crisis, which indicates stable bank operations, good cost control and successful credit risk management.

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