Banking sector faced 31.6 billion MNT deficit in 2019

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The Economic Policy and Competitiveness Research Center released its “Overview of Banking Competitiveness for Q4 2019” on April 7.

The report reviewed the operations and competitiveness of 13 active banks in Mongolia.

In the fourth quarter of 2019, the total assets of the banking sector amounted to 35.8 trillion MNT, up by 0.9 trillion MNT (2.6 percent) from the previous quarter, and up by 2.7 trillion MNT (0.1 percent) compared to the fourth quarter of 2018. Capitals of banks dropped year-over-year by 0.23 trillion MNT to stand at three trillion MNT at the end of 2019. The sector suffered a deficit of 31.6 billion MNT in the reference period mainly due to the shutdown of Capital Bank.

Other highlights included:

•    Bank reserves reached 6.2 trillion MNT, increasing year-over-year by 1.7 trillion MNT.

•    Total loans continued to grow to 16.7 trillion MNT, while non-performing loans declined to 1.8 trillion MNT, accounting for        10.9 percent of total loans.

•    Outstanding mortgages reached 4.62 trillion MNT, up by 4.2 percent compared to the same period of 2018.

•    Total savings account held at banks amounted to 13.3 trillion MNT (up nine percent), while current accounts totaled 5.4          trillion MNT (up 18 percent).

•    Passive asset totaled 32.8 trillion MNT in Q4 2019, compared to 28.8 trillion MNT in Q4 2018

This year’s report highlighted pension loans since Parliament’s approval of one-time forgiveness of pension-secured loan debts was the biggest issue of Q4 2019. At the end of 2019, 228,700 pensioners had outstanding pension-backed loans worth 757.9 billion MNT. This suggested a decrease of 18.1 percent, or 167.5 billion MNT, compared to end-2018. On average, each pensioner borrowed 3.3 million MNT from banks.

A breakdown of pension-backed loans indicated that more than half of them ranged between three million and six million MNT, followed by loans amounting to less than three million MNT (20.1 percent), those from six million to 10 million MNT (15.4 percent), and loans for more than 10 million MNT took up 9.4 percent.

Dulguun Bayarsaikhan