National Bank of the Republic of Macedonia Council held its tenth session at which it discussed and adopted the Report on Financial Stability in the Republic of Macedonia for 2014
Today, the National Bank of the Republic of Macedonia Council held its tenth session at which it discussed and adopted the Report on Financial Stability in the Republic of Macedonia for 2014, concluding that financial stability was maintained also in 2014.
The financial system of the Republic of Macedonia has a relatively simple structure with minimal interdependence of the activities of the individual segments and absence of complex financial instruments and services. Stability of the financial system is determined by the stability of the banking sector as its dominant segment, where savings of the non-financial sector are concentrated. The assets of the banking system reached 76.1% of GDP and occupy 86.8% of the total assets of the financial system. Loans of banks to non-financial entities amount to 48.1% of GDP and banks' deposits for non-financial entities equal 54.6% of GDP, which tends to support the conclusion for a moderate financial intermediation.
Characteristic of 2015 was that the fully funded pension insurance realized a significantly faster growth compared with the banking system and the insurance sector, and its share in the financial system assets is 7.3%, while in GDP it is 6.4%. The insurance sector is the third largest segment of the financial system, accounting for 3.6% of total assets of the financial system and 3.1% of GDP.
Performances of the corporate sector and the households, particularly their financial potential, the level of income they generate and the level of indebtedness, have direct impact on the performances of financial institutions. The total indebtedness of the corporate sector to both the banking sector and foreign creditors continued to grow and reached around 64% of GDP. The assessment of the corporate sector solvency remains positive, given that in 2014 most indicators of indebtedness of the companies remained relatively stable.
The favorable developments in the labor market, accompanied by improved labor productivity, contributed to accelerating the growth of financial assets and disposable income of households, as well as the rate of saving. The total indebtedness of the households continued to grow, reaching the moderate level of 21% of GDP, with the banking sector being their main creditor. The indicators of solvency and liquidity are satisfactory. However, the growth of non-performing loans to households, which has been registered for the first time in a longer period, amid rapid growth in lending, signals a possible increase in the credit risk for the banking sector in the period ahead.
Currency features of financial products in the Republic of Macedonia in 2014 were extremely important for the stability, the performances and the financial potential of the private sector. Hence, the National Bank's policy of a stable exchange rate of the denar against the euro will continue to be an essential prerequisite for the sustainability of the debt of the corporate sector and households.
It is a general conclusion that financial stability continues in the future, indicators of solvency and liquidity are expected to remain high and the improved profitability will also be maintained.
At today's meeting, the Council also discussed and adopted the Decision amending the Decision on the method of determining related entities. The Decision is adopted in order to comply with the new document for measurement and control of large exposures, which is published by the Basel Committee on Banking Supervision. The application of the Decision will allow more accurate determination of the related entities, when they are not control related, but represent a single risk because they are related in a way that financial problems in one of the entities can cause problems in the repayment of the debts of the other. Moreover, the Decision introduces the possibility certain entities not to be considered to be related if the bank has indisputable evidence that they will be able to find other sources of funding or other business partners on time, thus overcoming the financial problems caused by the relation with other entities.
At today's session, the National Bank of the Republic of Macedonia Council, based on the planned schedule and pace of activities, also adopted the Decisions on issuing and the Decisions on putting into circulation the collector coins "Natalia" and "Olga" from the "Angel's Day" series. The coins will be issued in a denomination of 100 denars, in 5000 pieces. The Council also discussed other matters within its jurisdiction.
All rights reserved © 2017
National Bank of the Republic of North Macedonia