Today, the Financial Stability Committee has held the fourth meeting which was attended by the Minister of Finance and the Governor of the National Bank, as well as senior officials from both institutions
Today, the Financial Stability Committee has held the fourth meeting which was attended by the Minister of Finance and the Governor of the National Bank, as well as senior officials from both institutions. Under the jurisdiction of the Committee, as defined in the Memorandum of Cooperation for maintaining financial stability and managing the financial crisis in the Republic of Macedonia, at today's meeting, the Committee discussed the latest developments in the banking system of the Republic of Macedonia, and concluded that, against the background of turbulent domestic environment, banks have remained sound and reliable.
From mid-April to mid-May 2016, non-economic factors caused outflow of household denar deposits, followed by increasing propensity to hold foreign currency and accordingly, increasing demand for foreign currency on the currency exchange market and the foreign exchange market. Against this backdrop, banks have successfully managed liquidity efficiently and have met all requirements for payment of deposits seamlessly, primarily due to the traditionally high volume of liquid assets, as well as the strengthened supervision by the National Bank. The above, coupled with the timely monetary policy measures, have promptly stabilized public perceptions of risks in the banking system. These developments decelerated the banking activities and terminated the increasing denarization. In the period June 2015 - June 2016, the deposits increased by Denar 5 billion, compared to the previous year (June 2015 - June 2014), when the growth was Denar 23 billion. The lending has also decelerated. Banks continued lending to the corporate sector with caution, so that credit growth primarily resulted from households. Besides the banks’ prudence, the credit growth also reduced due to the measures of the National Bank. Thus, the National Bank measure taken to prevent risks of increasing long-term household loans earmarked for consumption, as expected, resulted in a slight slowdown in the growth of consumer loans with maturity of over 8 years. The National Bank measure that required "cleansing" of loan portfolios from old nonperforming loans, has statistically improved the indicators of banks’ credit exposure quality, but on the other hand, has annulled the credit growth (if we exclude the effect of this measure, as of June 2016, the credit growth would have been twice as high). However, with this measure, NLP to total loans ratio reduced to 7.5%, which is by about one third lower compared to June 2015, when it was 11.5%. Bank's liquid assets remained satisfactory. Along with sufficient liquidity, high solvency of the banking system is the backbone of its stability and resilience. The capital adequacy ratio equals 15.8%, which is twice as high as the capital requirement of 8%. At the meeting, the Committee has also discussed the progress of the implementation of the European banking directive and regulation, and EU Bank Recovery and Resolution Directive, and has concluded that the establishment of these new standards requires coordination of at least the two institutions. Governor's Office
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