The aggregated net profit reported by the banking system in Kosovo (chart) increased by 8.7% y/y to €163mn in 12 months to the end of May 2024, according to data reported by the central bank of Kosovo (BQK).

The latest data published by BQK indicate robust profitability ratios, slightly rising financial intermediation (stock of loans growing faster than nominal GDP) and steady consolidation of the banking system’s capitalisation (own funds) in real terms (faster than GDP or the stock of loans).

The stock of loans increased by 12.5% y/y to €5.22bn at the end if May. The average stock of bank loans in the past 12 months increased by 13.2% y/y — faster than the 8.7% advance of profit calculated in similar terms.

The financial intermediation measured by the stock of loans to GDP ratio is at a modest level of 55% at the end of May (preliminary data), based on slightly outdated 12-month GDP data available (at the end of September 2023). The ratio will perhaps drop towards 50% once the GDP is updated upwards (12 months to end-March).

Based on the stock of bank loans in 12 months to September 2023 (where the latest GDP data is available), the financial intermediation was at that time only 48%, nevertheless up from under 46% one year earlier.

The return on assets (ROA) calculated for the banks in Kosovo based on 12-month rolling profit and assets remained above 2% since August 2021 and reached 2.2% at the end of May 2024.

The return on equity (own funds) calculated on the same 12-month basis is on a downward path to 18.3% at the end of May from 20.2% as of August 2023. This is a result of the relatively fast expansion of Kosovar banks’ own funds: by 15.6% y/y to €890mn at the end of May and by 18.6% y/y for the 12 months ending May.