National Bank of the Republic of Macedonia Council held its fourteenth session, at which it discussed the Report on the Risks in the Banking System in the second quarter of 2015, concluding that also in that period the total assets of the banking system grew, amid faster growth of the loans to non-financial entities relative to their deposits
Today, the National Bank of the Republic of Macedonia Council held its fourteenth session, at which it discussed the Report on the Risks in the Banking System in the second quarter of 2015, concluding that also in that period the total assets of the banking system grew, amid faster growth of the loans to non-financial entities relative to their deposits. Lending was financed by using the liquid assets of banks, i.e. by reducing their placements with other banks and financial institutions. Enhanced credit support was registered with both the households and the corporate sector, especially the former. The total deposits of the banking sector continue to grow, but due to the internal political developments and the debt crisis in Greece that growth was lower among households. The increase in deposits with banks was a result of the new denar deposits of the corporate sector, which also contributed to the reduction in the maturity of the deposit potential.
Increased lending activity of banks led to a slight decrease in the share of non-performing loans in total loans to 11.5%, moving within the level common for the last two years, between 11% and 12%. Among companies, this share increased minimally, to 16%, due to the faster growth of non-performing loans relative to the credit support. Among households, the rate of non-performing loans continued to decline, influenced by the rapid credit growth, mainly in consumer loans. Due to the high coverage of total non-performing loans with allocated impairment, the probability of banks' own funds to be affected by possible materialization of the credit risk is low.
The liquidity of the banking system in the Republic of Macedonia remains stable and satisfactory, despite the use of banks' liquid assets, which increased in the second quarter of 2015. The slight decrease in the liquidity indicators was more pronounced in denar liquidity indicators, but it caused change in the structure of assets and liabilities according to their residual maturity, i.e. a reduction of assets with shorter residual maturity and a reduction of liabilities with longer residual maturity.
The stable solvency of the banking system strengthened further. In the second quarter of 2015, the capital adequacy ratio increased slightly to 16.2%, with the increase in the own funds of the banking sector being the main factor for the increase. The positive trend in profitability continued, mainly due to deposit interest rates, which were falling also in the second quarter of 2015. That narrowed room for further cuts in deposit interest rates is expected to represent a significant challenge to banks' profitability in the future.
At today's session, the Council also adopted the Decision on the manner and the terms of recording and reporting on the concluded credit operations. The Decision, which replaced two previous decisions, is envisaged to simplify the procedure for registration of credit operations with non-residents, which will reduce the reporting burden and streamline the operations at the National Bank. Furthermore, by reducing the volume of documentation for individual recording of foreign credit operations the goal is achieved, i.e. such recording is defined as statistical, and it is primarily intended for the official statistics of the country.
At today's session, the Council discussed also the Report of the Operations of the Internal Audit in the first half of 2015, concluding that the Audit Work Program was fully accomplished.
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 putting into circulation the collector coins "Dimitar" and "Elena" 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.
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