The aggregated profit of BiH banks increased by 39% y/y to KM240m in 2017, which is the best result reported so far, according to data by the entity’s Banking Agency. Out of the 15 banks operating in the Federation, 13 reported a cumulative profit of KM247.3m, while two posted a loss of total KM7.3m. The increase of the profit was a result of the higher total revenues supported by significant growth in operating revenues (mostly for service charges and one-off revenues), rise in net interest income (mainly as a result of a significant reduction of interest expenses) and a slight decrease in non-interest expenses.
Capital adequacy ratio of the banking sector fell by 0.2pps YTD to 15.5% at end-December, but remains well above the legal minimum of 12%. The share of NPLs in total loans decreased to 9.7% at end-December from 11.7% the year before as a result of the 7% lending growth, reduction of total NPLs and write-offs. The share of corporate NPLs was down by 3.1pps y/y to 11.9%, while retail NPLs decreased by 0.9pps y/y to 7.3%.