Montenegro banking stability remains as public debt and deposits shift

The banking sector in Montenegro is expected to remain stable despite potential interest rate shifts from the European Central Bank. Marija Šuković, Director of the Association of Banks of Montenegro, stated that there is currently no basis for sudden changes in local interest rates due to the specific structure of the credit portfolio and domestic financing methods. Variable-rate loans account for only 6.12% of total placements, and the sector primarily relies on deposits from citizens and businesses.

Economic indicators show that the average weighted effective interest rate in July was 6.12%. Non-performing loans reached a low of 2.4% at the end of July, the lowest level since 2010. While citizen borrowing is increasing, regulators indicate there are no systemic signs of over-indebtedness.

In related fiscal news, Montenegro's public debt decreased by 111.1 million euros during the second quarter of 2026, reaching 5.02 billion euros. However, state deposits fell by approximately 117.1 million euros, resulting in a slight increase in net public debt of about 6 million euros. Gross public debt stands at 58.5% of GDP.