UBS: Banks made loss of EUR 18 million in 2013

BELGRADE - Veroljub Dugalic, secretary general at the Association of Serbian Banks (UBS), said on Thursday that banks made a loss of EUR 18 million in 2013.

Presenting the latest report by the UBS credit bureau, Dugalic said that the end of year data indicated that banks' profit would amount to two-three percent, but that was corrected, as it became clear that banks operated at a loss.

The reason for the loss is a drop in the interest rate on loans, a 10 percent decline in lending activity, and an indirect write-off of investment at the end of the year.

The data are such that on December 31, 2013, 15 banks registered a loss, including Univerzal Bank to which the central bank revoked the operating license at the beginning of the year, while 15 banks operated at a profit.

"There are requirements set by the National Bank of Serbia (NBS) and there is a classification of companies," Dugalic said, speaking about a reduction in lending activity, adding that if, for example, a freeze has been placed on a company's assets, then it does not fall into category A, but rather category D, for instance, for which a bank's expenses are much higher.

"If a bank approves a EUR 1 million loan to a category D firm, then it must earmark the same amount for the reserves. For category A, no reserves are needed," Dugalic said.

Dugalic said that banks are safe, and noted that the capital adequacy ratio was at 20.9 percent, while the Basel Accord stipulated the minimum of eight percent, and Serbian law - 12 percent.

He noted that the liquidity coefficient stands at 2.5 (the Basel minimum is at one), which means that banks have money at their disposal whenever a client comes.

"It is good that banks are...