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Bosnia and Herzegovina’s banking sector: Facts & Figures

Updated December 2020 – For earlier editions of Facts & Figures click here

Bosnia and Herzegovina is a country in Southeastern Europe, located in the Balkan Peninsula, with a population of 3.5 million. It is home to three ethnic constituent peoples, Bosniaks, Serbs, and Croats, plus a number of smaller groups including Jews and Roma. Sarajevo is the capital and largest city.

The convertible mark (konvertibilna marka – KM-BAM) – the national currency is pegged to the euro through a currency board arrangement within the Central bank of BiH, which has maintained confidence in the currency and has facilitated reliable trade links with European partners (€1 = 1,95583 KM).

Bosnia and Herzegovina’s Nominal GDP Per Capita is forecasted to be €5,064 in December 2019 as reported by the International Monetary Fund Report. Looking ahead, Bosnia and Herzegovina’s Nominal GDP Per Capita is projected to stand at €5,522 in December 2023.

The BiH financial system is dominated by commercial banks. Currently 23 banks operate on the market.

As Bosnia and Herzegovina consists of two entities: Federation of BiH and Republic of Srpska, there are two supervising bodies i.e. two banking agencies for the banking sector: the Banking Agency of Federation of BiH and Banking Agency of Republic of Srpska.

In 2019, the banking sector continued its growth as well being a generator of business for the BiH economy.

Despite great competition, decreased interest rates and modest credit growth, the results of the sector’s operations show a profitability that has not been recorded in recent history until now. All banks achieved the best results in history.

As of December 2019, net profit of banks amounted to €185,5 million that is12% higher compared to the previous year.

Total assets of the banking sector, as of December 2019 amounted to €18 billion, and grew by 7,8% compared to 2018.

Credit growth in the same period was 6,6% higher compared to 2018, while the total value of loans reached the level of €10,8 billion. Legal entities (€5,4 billion) grew by 5,4% and loans to individuals (€5 billion) by 7.9%

Deposits grew by 9,5% compared to 2018 and reached the level of €13,2 billion. Deposits of legal entities had much higher growth (10,16%) than deposits by individuals (9%).

Loans to legal entities amounted to €5,4 billion (51,6% of share), while loans to individuals amounted to €5 billion (48.4% of share).

The increase in deposits and loans enabled the increase of economic activity throughout the country.

Contributor: Berislav Kutle