## Republic of Serbia: Financial Sector Assessment Program Update: Technical Note on Banking Sector Soundness and Stress Testing

_IMF Staff Country Reports, May 27, 2010_

## Source details

**Canonical URL:** [Republic of Serbia: Financial Sector Assessment Program Update: Technical Note on Banking Sector Soundness and Stress Testing](https://www.imf.org/en/publications/cr/issues/2016/12/31/republic-of-serbia-financial-sector-assessment-program-update-technical-note-on-banking-23911)

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## Bibliographic details
- Published: May 27, 2010
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781455205653.002

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### Summary overview
- This Technical Note reviews banking sector soundness and stress testing in Serbia.
- Serbia’s banking sector is well capitalized and liquid.
- The corporate sector’s weak performance is a source of concern because of its adverse impact on nonperforming loans.
- Stress tests indicate that banks are quite resilient to further adverse shocks, but they remain vulnerable to credit risk.
- The results highlight that the banking system is most vulnerable to further exchange rate depreciation, through foreign currency induced credit risk, and a prolonged economic downturn.

### Major findings
- Banking sector condition: well capitalized and liquid.
- Credit risk: elevated, driven by corporate sector weakness and adverse impact on nonperforming loans.
- Resilience: banks are quite resilient to further adverse shocks according to stress testing.
- Key vulnerability channels:
  - Exchange rate depreciation leading to foreign currency induced credit risk.
  - Prolonged economic downturn increasing nonperforming loans.

### Stress testing results (high-level)
- Stress tests indicate overall resilience of banks to further adverse shocks.
- Remaining vulnerability is concentrated in credit risk, notably linked to:
  - foreign currency exposure,
  - corporate sector performance,
  - prolonged economic downturn.

### Subjects and keywords (as listed)
- Subjects: Banking, Commercial banks, Corporate sector, Economic sectors, Financial institutions, Financial sector policy and analysis, Loans, Nonperforming loans, Stress testing
- Keywords: asset quality, balance sheet, bank assets, bank concentration, bank ownership, banking system, banks' assets, Commercial banks, Corporate sector, coverage ratio, CR, credit growth, Eastern Europe, exchange rate, Global, holdings of T-bills, ISCR, Loans, market share, Nonperforming loans, operating income, parent bank, return on equity, Southern Europe, Stress testing

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- **Cr10149**
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_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/republic-of-serbia-financial-sector-assessment-program-update-technical-note-on-banking-23911_