How would you describe the current state of North Macedonia’s commercial banking sector, and what role does it play in economic growth and financial stability?

The banking sector is one of North Macedonia’s strongest institutions. It has consistently demonstrated stability, predictability, and resilience, making it the dominant pillar of the country’s financial system. Banks play a central role in supporting the real economy by financing businesses, households, and government projects, while also investing in government securities. Throughout the country’s independence, and particularly during periods of crisis such as the 2008 global financial crisis and the COVID-19 pandemic, the banking sector has remained resilient and continued to support economic activity.

North Macedonia has a bank-centric financial system, with businesses relying primarily on commercial banks rather than capital markets for financing. While the country has a stock exchange, banks themselves established and continue to support its development. The sector also maintains exceptionally strong financial indicators. Return on equity stands at around 15%, profitability remains healthy, and a significant share of earnings is retained to strengthen capital reserves rather than distributed as dividends. Capital adequacy is high, while the liquidity coverage ratio exceeds 260%, reflecting a highly liquid and well-capitalized system. Combined with prudent supervision by the National Bank and a stable exchange rate, these factors have created a competitive yet secure banking environment that continues aligning closely with European Union standards.

What have been the Macedonian Banking Association’s key achievements and priorities over the past year?

One of our primary priorities has been strengthening financial education alongside consumer protection. Improving regulation is important, but customers also need the knowledge to understand financial products and use them confidently. Within the association, our specialized commissions—including those covering payments, legal affairs, foreign exchange, capital markets, transparency, and ESG—actively participate in reviewing legislative changes proposed by the National Bank and the Ministry of Finance, ensuring that the banking sector contributes constructively to regulatory development.

At the same time, we recognize that financial literacy remains one of the country’s greatest challenges. Together with the National Bank and European banking organizations, we have expanded initiatives targeting young people, including financial education programs for students beginning at age 14 and the European Money Quiz. These programs help fill a gap, as financial education is generally absent from the standard school curriculum.

The association has also supported major modernization initiatives across the banking sector. All member banks have joined SEPA, allowing customers to benefit from faster and more efficient cross-border payments. Strong Customer Authentication has also been implemented in accordance with European regulations. While some customers initially found these security measures challenging, the experience has highlighted the importance of continuing financial education. Additionally, our ESG Committee developed a standardized ESG questionnaire in cooperation with the national Credit Bureau, helping both banks and businesses assess environmental, social, and governance performance while preparing for evolving European sustainability requirements.

How is digital transformation changing banking services in North Macedonia, and what does this mean for customers and businesses?

Digital transformation has accelerated significantly over the past several years, although customer behavior has evolved gradually. When payment cards were first introduced, many people were reluctant to use them until legislation effectively made bank accounts and debit cards a necessity. A similar pattern emerged with digital banking. Before the pandemic, online and mobile banking services were available but adoption remained relatively modest. COVID-19 fundamentally changed customer attitudes by demonstrating how digital channels could simplify everyday financial activities.

Since then, customers have increasingly embraced mobile banking, online payments, digital loan applications, and other remote banking services because they save time and improve convenience. Many banks now operate digital branches and continue expanding their online offerings. Although customers in North Macedonia still tend to visit physical branches more frequently than in some other European markets, digital usage continues to grow steadily.

Behind these services lies significant investment by the banking sector. Banks devote substantial resources to cybersecurity, data protection, backup systems, business continuity, and compliance with GDPR standards. Compared with many other sectors of the economy, banks are among the country’s most advanced organizations in information technology and digital security. As digital adoption continues to increase, customers and businesses alike benefit from faster, safer, and more efficient financial services.

How does the banking sector support SMEs and promote broader financial inclusion?

Supporting small and medium-sized enterprises remains an important priority across North Macedonia’s banking sector, although each bank has developed its own market focus. Some institutions have traditionally specialized in SME lending, while others concentrate on retail customers or large corporate clients. This diversity allows businesses of different sizes and industries to access financing tailored to their specific needs.

In addition to their own lending programs, virtually all banks participate in internationally supported credit lines designed specifically for SMEs. These include financing provided through institutions such as the European Investment Bank, the European Bank for Reconstruction and Development, and the Macedonian Development Bank. Banks distribute these funds across the economy, helping businesses invest, expand, and improve competitiveness.

Financial inclusion is also closely linked to broader efforts to improve financial literacy and digital access. As more banking services become available online and customers gain greater confidence using digital platforms, access to financial products continues to improve. Combined with educational initiatives and stronger consumer protection, these developments are helping ensure that individuals and businesses throughout the country can participate more fully in the formal financial system.

How is North Macedonia’s banking sector progressing toward European Union standards and greater international integration?

The banking sector has spent many years steadily aligning its regulatory framework with European Union legislation. Although North Macedonia is not yet an EU member, the National Bank has consistently introduced reforms that closely mirror European directives and supervisory practices. In many areas, the country has progressed even further than would normally be expected at this stage of the accession process.

A significant advantage is the ownership structure of the banking sector. Approximately 90% of banking assets are held by subsidiaries of European banking groups. As a result, local institutions regularly apply European standards across areas such as risk management, payment systems, anti-money laundering, transparency, GDPR compliance, and corporate governance because they are required to meet the expectations of their parent institutions.

While some differences between domestic and EU regulations naturally remain, the direction of travel is clear. Local legislation continues evolving in line with European requirements, supported by a proactive National Bank and a highly professional supervisory framework. This ongoing convergence strengthens confidence among investors while facilitating deeper integration with regional and international financial markets.

What message would you like to share with international investors considering opportunities in North Macedonia’s banking sector?

North Macedonia offers investors a banking system characterized by stability, profitability, and predictability. The sector has demonstrated resilience across multiple economic cycles and benefits from prudent supervision, experienced banking professionals, and a regulatory environment that consistently prioritizes financial stability. These qualities have attracted substantial foreign investment over many years, with most of the country’s major banks now belonging to leading European banking groups.

Beyond banking itself, there are still attractive opportunities across sectors of the broader economy that remain underdeveloped and could benefit from additional international investment. Success in these areas will continue to depend on cooperation between investors and government, creating an environment that encourages long-term growth and competitiveness.

The country’s diaspora also contributes meaningfully to the economy through remittances sent to family members. These inflows strengthen household finances, support domestic consumption, and contribute to the banking system’s deposit base, reinforcing overall financial stability. Together, these factors position North Macedonia as a stable and attractive destination for investors seeking long-term opportunities in Southeast Europe.