Press release regarding the Banking Sector Strenghtening Project
For the purpose of objective informing and bearing in mind media statements regarding the Banking Sector Strengthening Project based on which the public gets the impression that the funds from the project will be used, as stated in the media, for the “recovery of the banking sector”, i.e. that “such loans will be used in order to save the banking sector”, we hereby inform the public that this is a project funded by the World Bank in order to improve the soundness of the banking sector by enhancing regulation, supervision and resolution capacity and by enhancing the governance of the entities development banks.
Banks from Republika Srpska shall in no way be beneficiaries of project funds, while the Banking Agency of Republika Srpska is only the beneficiary of technical assistance for drafting of by-laws, where such technical assistance will be funded by donor funds in the amount of cca. 1.4 million KM for the entire Bosnia and Herzegovina, as stated in the Proposal decision on accepting the loan to Republika Srpska provided by the World Bank under the Banking Sector Strengthening Project.
In terms of the Republika Srpska banking sector condition, according to the data as of March 31, 2017, at the level of the banking sector net profit in the amount of 40.8 million KM was recorded. Given that loans account to 65% of gross balance sheet assets, the stability and profitability of each individual bank and the banking sector as a whole depends predominantly on the level of loan collection. The share of total non-performing loans in total loans has a positive downward trend, that is as of March 31, 2017 the share decreased by 0.24 percentage points if compared to the end of 2016, and now amounts to 11.74%, while in 2015 the same share amounted to 15.56%. The reduction of non-performing loans is also evident at a nominal amount. According to the data as of March 31, 2017, the non-performing loans amounted to 542.1 million KM, while at the end of 2016 they amounted to 546.1 million KM, that is 754.1 million KM at the end of 2015.
It is important to emphasize that according to the data as of March 31, 2017, all banks headquartered in Republika Srpska meet regulatory requirements, especially systematically important banks whose indicators are well above all minimum regulatory requirements.