“Strong demand, tighter credit supply” - EIB report on banks in Central, Eastern and Southeastern Europe
Banks in Central, Eastern and Southeastern Europe (CESEE) expect credit demand to remain strong for businesses and households in the next six months and a slight weakening in credit supply, mainly reflecting a reduced willingness to lend to large companies, the European Investment Bank (EIB) said.
Credit demand has remained favorable in recent years, driven mainly by retail customers. In contrast, credit supply in Central, Eastern and South-Eastern Europe has been weak or neutral since 2022, despite some signs of improvement in 2024, and has remained broadly stable over the past two years, the EIB said in its Bank Lending Survey for the first half of 2026.
The semi-annual survey covered Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Kosovo, North Macedonia, Poland, Romania, Serbia and Slovakia. It included 12 international groups and 65 local branches or independent local banks, representing over half of banking assets in the region.
Most parent banks in Central, Eastern and South-Eastern Europe have maintained or increased their exposure to the region over the past six months. Looking ahead, more than 75% of cross-border banking groups in the region plan to expand selectively, while almost a quarter expect to maintain the current level of activity. No banking group has signaled any intention to reduce its presence.
The market potential is generally seen as high, especially in the Czech Republic, Romania and Slovakia, and as moderate in the Western Balkans. Profitability in the region is seen as higher compared to operations across the group, especially in Bosnia and Herzegovina, Bulgaria, the Czech Republic, Hungary, Kosovo, North Macedonia and Serbia.
According to the banks surveyed, credit quality has improved again in the last six months, with fewer non-performing loans. However, banks expect a deterioration in credit quality over the next six months for retail and corporate businesses, although similar pessimistic forecasts in recent years have not materialized.
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