Financial Stability Indicators in the Banking Sector of the Republic of Srpska: A Descriptive Assessment of Restructuring Signals

Abstract

restructuring indicators in the banking sector of the Republic of Srp ska for the period 2020–2024, utilizing aggregate year-end supervi sory data published by the Banking Agency of the Republic of Srpska. In accordance with domestic banking-resolution regulations and in ternational standards, financial restructuring is defined as a set of ex traordinary measures designed to preserve critical functions and maintain financial stability when standard supervisory and recovery actions prove inadequate. The study employs descriptive and compar ative analyses, including both horizontal and vertical approaches, to evaluate trends in capital adequacy, profitability, efficiency, asset quality, liquidity, and growth, referencing relevant regulatory and an alytical benchmarks. The findings demonstrate high capital adequacy, stable liquidity, improved profitability and efficiency, and a reduction in the non-performing loan ratio from 5.2% in 2020 to 3.7% in 2024. However, declining coverage of non-performing loans, a slight increase in non-performing loans in 2024, and a substantial propor tion of short-term financial liabilities signal the need for ongoing su pervisory vigilance. Aggregate data do not suggest immediate, widespread distress in the banking sector at the end of 2024. Nonetheless, given increased macro-financial uncertainty, ongoing monitoring and prompt preventive measures are essential to address vulnerabilities before recovery or restructuring interventions are re quired. This study provides a transparent, context-specific evaluation of recent supervisory data within a small, bank-centered financial sys tem. As the analysis is based on aggregate sector-level data, the results do not preclude vulnerabilities at individual banks or confirm re silience under adverse stress conditions.