In 2023, the National Bank of Serbia (NBS) reported a profit before taxation of 26.43 billion dinars, with a net profit of 26 billion dinars after taxation, according to its financial report. This marks a decrease from 2022, when the profit before taxation was 40 billion dinars, and the net profit was 39.5 billion dinars—indicating a reduction of 13.5 billion dinars in net profit for the year 2023.
Despite this decline in net profit, the NBS has increased its contribution to the national budget significantly. For 2022, the central bank allocated 2.75 billion dinars to the budget, whereas for 2023, it has set aside 12.3 billion dinars—approximately four times more than the previous year. The net profit of the NBS has been decreasing for the third consecutive year, down from 55.5 billion dinars in 2021.
The distribution of the NBS’s profit follows a strict formula. Initially, the entire profit is allocated to the bank’s basic capital until it reaches the minimum required amount. Any excess is then directed towards special reserves until these reserves total 20 billion dinars. Once both the minimum basic capital and special reserves are established, the profit is split: 33.3% goes to basic capital and 66.7% to special reserves for profits from exchange rate differences and revaluation reserves. The remaining profit is distributed with 10% to basic capital, 20% to special reserves, and 70% to the national budget.
In 2023, 4.5 billion dinars were allocated to increase basic capital, while 9.1 billion dinars were set aside for special reserves. The report also detailed the gross and net salaries for key management, including the governor, vice-governors, sector directors, and other senior officials, amounting to 476.1 million dinars in net earnings—a rise of 66.8 million dinars compared to 2022.
Impact of interest rates and exchange rate changes
The NBS’s financial report also included risk scenarios for unexpected changes in interest rates and exchange rates. If interest rates had risen by 100 basis points (1 percentage point) on December 31, 2023, the impact on various currency portfolios would have been significant. The euro portfolio would have lost 16.94 billion dinars (144.57 million euros), the dollar portfolio 5.09 billion dinars (48.12 million dollars), the British pound portfolio 316 million dinars (2.34 million pounds), and the Canadian dollar portfolio 379 million dinars (4.74 million CAD).
In comparison, an interest rate increase of 100 basis points a year earlier would have resulted in a loss of 11.28 billion dinars.
Regarding foreign exchange risk, the NBS’s exposure through foreign currency transactions has led to significant variations in exchange rate differences. For 2023, net income from exchange rate differences and currency clauses was 8.38 billion dinars, down from 35.6 billion dinars in 2022.
In a scenario where the dinar weakened by 1% against the EUR, USD, CHF, and SDR (Special Drawing Rights from the IMF) on December 31, 2023, the bank’s capital and profit would have increased by 17.51 billion dinars. In 2022, the corresponding figure was 12 billion dinars. Conversely, a 1% strengthening of the dinar would have an opposite effect, assuming all other variables remain unchanged.
