NPLs hold back Serbian banks as economic imbalances remain, says central bank

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Photo: LukaP/Wikimedia Commons

A high share of non-performing loans (NPLs) is increasing Serbian banks' risk aversion and jeopardising banking sector profitability, according to the National Bank of Serbia's 2012 financial stability report, released this week.

The report also notes sluggish capital inflow caused by investor risk aversion, due to the lack of fiscal adjustment and an underdeveloped domestic capital market, as an alternative source of funding.

The central bank says a change in the behavioural pattern of European

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