Today, the National Bank of the Republic of Macedonia Council held its eleventh session, at which the Report on the risks in the banking system of the Republic of Macedonia in the second quarter of 2016 was discussed
Today, the National Bank of the Republic of Macedonia Council held its eleventh session, at which the Report on the risks in the banking system of the Republic of Macedonia in the second quarter of 2016 was discussed, concluding that the developments in this period once again proved the stability and the resilience of the Macedonian banking system.
In environment of domestic political instability, in the second quarter of 2016, the assets of the banking system registered a decrease of 1.5%, which was especially evident in April and May, when the worsened expectations of the economic agents resulted in deposit withdrawal from the banks. These developments, accompanied with the speculative increase in the demand for foreign exchange on the currency exchange market, imposed the need of increasing both, the interest rate on CB bills and the reserve requirement rate for the banks' liabilities in denars with FX clause. The National Bank once again enabled the banks to place foreign currency deposits at positive interest rates. As a result of these measures of the National Bank, the decrease in the household deposits ceased and since June, they have been registering an increase again. Due to the high amount of liquid assets accumulated in the previous periods, the decrease in the deposits in the second quarter has no significant transmission effects on the bank loans made. These registered a solid quarterly growth of 2.4%, so the annual rise equaled 8.2%.
These data on the credit growth exclude the effects of the transfer of part of the totally non-performing loans to the off-balance sheet record until 30 June, which was mandatory for the banks. All costs related to the provisioning of these claims have been made in the previous years, so this measure did not cause any additional expenses for the banks. At the end of the quarter, the share of non-performing loans in the total loans equaled 7.5%. The risk for the banks' own funds from possible materialization of the credit risk in future is not high due to their high coverage of the loans with allocated impairment, as well as because of the satisfactory volume and quality of banks' own funds.
The withdrawal of the deposits from the banking system in the second quarter of 2016 caused fall in the banks' liquid assets, but because of their previous high amount, as well as due to the instruments of the National Bank for liquidity creation, the credit growth was not jeopardized, while the profitability was still mounting. The capital adequacy ratio registered small decline in the second quarter and as of June it equaled 15.6%.
It was concluded that the fast reaction of the National Bank contributed in maintenance of the stability of the banking system and in strengthening of its main function of financial intermediation among depositors and credit users.
At today's session, the Council reviewed and adopted the Decision on issuing license and approval for performing fast money transfer. This version of the Decision is new and it is adopted due to statutory amendments. Namely, the Law on Amending the Law on Performing Fast Money Transfer has been harmonized with the Law on General Administrative Procedure, which prescribes the obligations of the public authorities, ex officio, to obtain the documents and data on clients whose official record is maintained by another public authority. The Decision, inter alia, sets the documents that the authorized persons from the National Bank should provide ex officio from other competent authorities.
The Council also discussed other matters within its jurisdiction.
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