BANKING COMPETITION REVIEW 2018 – Ⅳ Quarter

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BANKING COMPETITION REVIEW 2018 – Ⅳ Quarter Economic Policy and Competitiveness Research Center BANKING COMPETITION REVIEW 2018 – Ⅳ Quarter Banking system news in Mongolia 10.03 – XacBank’s President, Mr. Amartuvshin, signed a 11.23 – 9th anniversary of the State Bank. statebank.mn contract extension with Oyu Tolgoi to continue partnership and support Oyu Tolgoi suppliers.. xacbank.mn 11.27 – National Electronic Transaction Centre (NETC) of the Bank of Mongolia raised the daily limit for digital 10.13 – S&P Global Ratings upgrades Foreign Currency transaction to MNT 3 million, from previous limit of MNT 1 LT credit rating of Golomt Bank to "B" from "B-"; outlook million. montsame.mn stable. golomtbank.com 11.27 – At the unscheduled meeting, the Monetary Policy 10.19 – 28th anniversary of the Trade and Development Committee decided to increase the Policy rate by 1.0 Bank of Mongolia. tdbm.mn percentage point to 11 percent. mongolbank.mn 10.23 – How to make a secure online purchase? 11.28 – For the first time in Mongolia, TDB and Shoppy.mn golomtbank.com (online shop) introduced new online loan service which enables people to buy products. tdbm.mn 10.25 – Golomt Bank signed “Framework Agreement on Regular Cooperation Mechanism under the Belt and Road 11.28 – XacBank appoints Tsevegjav Gumenjav as Initiative” with Industrial and Commercial Bank of China President of Retail banking. xacbank.mn (ICBC). golomtbank.com 11.30 – “Transport and Development Bank” LLC has 10.26 – Capitron bank and Bank of Inner Mongolia signed received its professional underwriting license pursuant to foreign trade financing and interbank credit line Financial Regulatory Commission Resolution No. 361. agreements. capitronbank.mn transbank.mn 10.29 – Khan Bank introduced the financial education 12.11 – Mongolian sustainable finance forum 2018 was program Future (Ireedui), on the occasion of World held. toc.mn Savings Day. khanbank.com 12.13 – Mercy Corps’ Country Director to Mongolia, 11.01 – IMF executive board completes fifth review under Wendy Guyot, signed a partnership agreement with the extended arrangement for mongolia and approves XacBank CEO Bold Magvan. xacbank.mn US$ 36.22 million disbursement. imf.org 12.14 – The Monetary Policy Committee decided not to 11.05 – TDB extends auto car financing loan term up to 60 change the Policy rate thus it remains at 11 percent. months. tdbm.mn mongolbank.mn 11.10 – Standard and Poor's (S&P) rating agency has 12.26 – The Bank of Mongolia started using the developed upgraded the Mongolian sovereign credit rating to "B" from version of online platform for inter-bank currency "B-" with a stable outlook. xinhuanet.com exchange. montsame.mn 11.15 – Parliament of Mongolia has approved the State Guideline for the Monetary Policy of 2019. mongolbank.mn www.ecrc.mn www.aimagindex.mn www.facebook.com/ecrcmn www.twitter.com/ursulduhchadvar 1 Economic Policy and Competitiveness Research Center BANKING COMPETITION REVIEW 2018 – Ⅳ Quarter Key indicators of banking sector1 40 8% 33,1 Total assets = MNT 33.1 trillion 31 28,8 28,9 30,2 30 6% 6,6% Total assets of banking sector increased to MNT 33.1 trillion as of Q4, 2018, MNT 2.1 trillion (+6.6%) 20 4% 2,5% 4,5% higher than the previous quarter, and MNT 4.3 trillion (+14.8%) higher than Q4, 2017. 10 2,6% 2% 0,4% TRILLION MNT TRILLION 0 0% 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 Assets Growth % (right) 4 400 Profit = MNT 96.8 billion 3,15 3,16 3,18 3,10 3,26 3 249,1 300 Bank capital has reached MNT 3.26 trillion as of Q4, 2 200 2018 which is MNT 0.11 trillion (+3.5%) higher than 96,8 58,7 Q4, 2017. Banking sector’s profit reached MNT BILLIONMNT TRILLIONMNT 1 42,2 100 32,4 96.8 billion as of Q4, 2018 and 2.5 times less than 0 0 the Q4, 2017. 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 Bank capital Profit, loss (right) 5 4,5 Bank reserve = MNT 4.5 trillion 4 3,4 2,9 3,1 3 2,5 Bank reserve reached MNT 4.5 trillion as of Q4, 2 2018 which is MNT 1.4 trillion or 46% higher than the previous quarter. 1 0 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 Bank reserve, trillion MNT 16 14,5 15,3 16 12% 12,9 13,5 Non-Performing Loans = 11.1% 12 11,1% 8% Total loans reached MNT 16 trillion as of Q4, 2018. 8,9% 9,1% 9,0% 8,8% 8 However, NPL is still high. Total NPL reached MNT 4% 1.77 trillion which account for 11.1% of the total 4 domestic loans. 0 0% 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 Total domestic loans NPL as of % 1 Source: Central Bank of Mongolia www.ecrc.mn www.aimagindex.mn www.facebook.com/ecrcmn www.twitter.com/ursulduhchadvar 2 Economic Policy and Competitiveness Research Center BANKING COMPETITION REVIEW 2018 – Ⅳ Quarter 5 Mortgage = MNT 4.43 trillion 4,25 4,25 4,33 4,35 4,43 4 Total mortgage loan reached MNT 4.43 trillion as 3 of Q4, 2018. Total mortgages have increased 2 constantly since the ‘Program on the Development of Sustainable System of Mortgage MNT TRILLION 1 Financing’ program was implemented. 0 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 Mortgage Current + Deposit = MNT 17.5 trillion 20 17,5 15,4 15,9 Total deposit reached MNT 12.2 trillion (26.9% 16 13,5 13,9 growth since Q4, 2017) and total current account reached MNT 5.3 trillion (36.9% growth since Q4, 12 2017) as of Q4, 2018. 8 4 0 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 Current Deposit Total 1 USD = 2637 MNT | 1 CNY = 383 MNT 3000 400 383 380 380 379 377 377 376 372 371 2800 366 380 Monthly average of official Foreign Exchange 365 360 Rates: USD reached 2637 MNT whereas CNY 2600 360 2637 2582 reached 83 MNT as of the DEC 2018. USD to MNT 2564 2503 2464 2400 2463 340 2432 2425 2405 2403 2395 rose by 204 MNT (+8.4%) and YUAN to MNT rose 2394 by 14 MNT (+3.8%) compared to the same quarter 2200 320 of the previous year. 2000 300 USD CNY (right) 29,8 Total liabilities = MNT 29.8 trillion 30 27,1 27,9 8% 25,6 25,8 As of Q4, 2018, total liabilities reached MNT 29.8 6,8% 6% trillion which is MNT 4.2 trillion (+16.3%) higher 20 5,0% than the same quarter of the previous year. 3,0% 4% 2,7% 10 TRILLION MNT TRILLION 2% 0,7% 0 0% 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 Total liabilities Growth % (right) www.ecrc.mn www.aimagindex.mn www.facebook.com/ecrcmn www.twitter.com/ursulduhchadvar 3 Economic Policy and Competitiveness Research Center BANKING COMPETITION REVIEW 2018 – Ⅳ Quarter Featured: Bank lending across provinces As of Dec 2018, around 608 thousand people from 21 provinces have borrowed from banks and have total outstanding loans of MNT 4.2 trillion. Only 2.5% of total outstanding loans is overdue or non-performing loans. As shown in below figure, Orkhon province has the largest outstanding loans worth MNT 345.9 billion whereas Gobisumber province has the smallest outstanding loans worth MNT 73.8 billion. Darkhan-Uul and Orkhon provinces have the lowest average loan interest rate (16%) whereas Bayankhongor province has the highest average loan interest rate (17.8%) as for loans which issued only in Dec 2018. MNT 2.5 trillion or 60% of total outstanding loans (MNT 4.2 trillion) of provinces are only salary and pension loans. Total outsanding loan, provinces 400 20% 346 17,5% 325 307 300 286 276 227 220 225 198 192 192 187 200 171 180 10% 159 139 133 143 123 116 100 74 0 0% Total outstanding loan, billion MNT Weighted average interest rate of loans which issued in Dec, 2018 www.ecrc.mn www.aimagindex.mn www.facebook.com/ecrcmn www.twitter.com/ursulduhchadvar 4 Economic Policy and Competitiveness Research Center BANKING COMPETITION REVIEW 2018 – Ⅳ Quarter Banking system competition Currently 14 commercial banks are operating in Mongolia. Quarterly financial reports of banks were used in this Khan, TDB, Golomt, Xacbank, State Bank, Ulaanbaatar report and compared by the following indicators: City Bank are systematically important banks according to Assets Bank of Mongolia. These banks account for more than 90 Loan percent of the banking system in terms of assets. Current account, Deposit Profit The banks were classified as Top 3, Medium 3 and small banks, depending on their total amount of assets. Capital bank is not included in this report. The figure below ranks the 14 banks, according to total assets under control. The banks were classified as Top 3, Medium 3 and Small banks. Only Capital bank is not included in this review. TOTAL ASSETS BANKS Trade and Development Bank TOP-3 BANK >3 trillion MNT Khan Bank Golomt Bank Xacbank MEDIUM-3 BANK 1-3 trillion MNT State Bank Ulaanbaatar City Bank Capital Bank Chinggis Khan Bank Capitron Bank National Investment Bank SMALL BANKS <1 trillion MNT Arig Bank Bogd Bank Credit Bank Trans Bank www.ecrc.mn www.aimagindex.mn www.facebook.com/ecrcmn www.twitter.com/ursulduhchadvar 5 Economic Policy and Competitiveness Research Center BANKING COMPETITION REVIEW 2018 – Ⅳ Quarter Assets Total assets of the 13 commercial banks included in this Market share, by assets, 4Q'18 review have reached MNT 32.7 trillion.
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