Banks in Central, Eastern, and Southeastern Europe (CESEE) expect credit demand to stay strong for businesses and households in the next six months, and a slight weakening of credit supply, mainly reflecting a reduced readiness to extend loans to large companies, the European Investment Bank (EIB) said on Wednesday.

Credit demand has remained favorable in recent years, driven mostly by retail customers. In contrast, credit supply in CESEE has been weak or neutral since 2022, despite some signs of improvement in 2024, and has remained broadly stable over the past two years, according to the EIB's CESEE Bank Lending Survey for the first half of 2026.

The semi-annual survey covered Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czechia, Hungary, Kosovo, North Macedonia, Poland, Romania, Serbia, and Slovakia. It involved 12 international groups and 65 local subsidiaries or independent local banks, representing more than half of the banking assets in the region.

Most parent banks in CESEE have either maintained or increased their exposure in the region over the past six months. Going forward, more than 75% of cross-border banking groups in the region plan to expand selectively, while close to a quarter expect to maintain their current level of activity. No banking group has signaled any intention to scale back its presence.

Market potential is generally seen as high, especially in Czechia, Romania, and Slovakia, and as moderate in the Western Balkans. Profitability in the region is viewed as higher compared with group-wide operations, particularly in Bosnia and Herzegovina, Bulgaria, Czechia, Hungary, Kosovo, North Macedonia, and Serbia.

According to the surveyed banks, credit quality improved again in the last six months, with fewer non-performing loans. However, the banks expect some deterioration in credit quality over the next six months for retail and corporate business, although similar pessimistic forecasts in recent years have not materialized.

"These trends are encouraging for investment and economic development in the region, and a sign of the growth potential that CESEE represents for Europe," said Marek Mora, EIB vice-president. The survey was conducted in March and April.

The survey is a unique instrument for monitoring banking sector trends and challenges in the CESEE region. It contributes to the monitoring and understanding of cross-border banking activities, deleveraging, and the drivers and constraints influencing credit growth. It provides some forward-looking insights into cross-border banks’ strategies and market expectations. It complements domestic bank lending surveys by adding the value of comparability across countries and the unique feature of specifically addressing the parent/subsidiary nexus.