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Bosnia-Herzegovina Commercial Banking Report Q3 2012 - New Market Report Now Available

Fast Market Research recommends "Bosnia-Herzegovina Commercial Banking Report Q3 2012" from Business Monitor International, now available


Boston, MA -- (SBWIRE) -- 08/24/2012 -- BMI View: The Bosnian banking sector posted robust growth in 2011 and is set for further expansion in 2012. This coalesces with our fairly upbeat longer-term view predicated on expansion in the industrial and retail sectors. That said, we stress that there are risks in the short-term stemming from the eurozone sovereign debt crisis and domestic political instability. In line with the broader economy, the Bosnian banking sector posted positive growth through 2011, marking a significant turnaround from the brief contraction experienced in the tail end of 2009. According to the latest data provided by the Central Bank for Bosnia and Herzegovina, total industry assets expanded by 3.4% in November compared to the same month a year earlier. This marks an improvement from the 2.4% figure the previous month and is the fastest rate of expansion since March 2009. Underpinning this headline growth has been robust growth in lending. Indeed, the stock of outstanding loans to the private sector increased by 5.8% y-o-y in November, which although down from 5.9% the previous month is nonetheless a far cry from the negative readings seen from the second half of 2009 through 2010. Our core forecast sees continued growth in the banking sector, despite a slowdown in domestic economic growth. Specifically, we project industry growth of 3.5% in 2012, accelerating to 5.6% in 2013. In Bosnia & Herzegovina Commercial Banking Report Q2 2012 © Business Monitor International Ltd Page 33 addition to the gradual improvement in domestic demand conditions which will continue to support the recovery in bank lending, we also stress that the industry has substantial scope for further development. Bank assets are around 73% of GDP, indicating significant potential for further expansion. The long-term demand for infrastructure and industrial expansion will mean that Bosnia's banks will have a pivotal role in fostering economic development. Further growth in household incomes and consumer spending will all foster demand for more extensive and sophisticated banking services and financial products. In the short-term, however, we identify a number of stresses which could slow down banking sector expansion. As we have often alluded to elsewhere, the eurozone sovereign debt crisis is the single biggest risk facing the Bosnian economy. Domestic banks are not as exposed through financial contagion, but may nonetheless suffer in the event of a regional constriction in credit availability. The recently revised data from the central bank shows a marked drop in capitalisation growth is certainly concerning should it signal the start of a substantial withdrawal of investor funds. For the time being we remain sanguine given that deposit growth remains fairly robust. Should depositors instead start to withdraw funds, then we would become more concerned about systemic stability. Although the eurozone crisis poses the biggest existential risk, we also warn abo

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