Today, the National Bank of the Republic of Macedonia Council has held its regular meeting, and reviewed and adopted the Report on the risks in the banking system of the Republic of Macedonia in the third quarter of 2018. The Council has emphasized that the banking system maintained its stability in the third quarter of this year. The Council has also emphasized that the third quarter of 2018 was marked by accelerating assets growth due to the loans to non-financial entities and the liquid assets. Analyzing the loans to non-financial entities, household loans, primarily in denars, contributed the most to the quarterly growth indicating that banks prefer this kind of lending. Looking at the annual changes, as of 30 September 2018, lending to non-financial entities equaled 8.3% (of 30 June 2018: 6.5%).
The credit growth was also supported by the solid deposit growth. Although slightly slower on a quarterly basis, as of the third quarter of 2018, the annual deposit growth rate was 10.9%, versus 9% at the end of the second quarter of the year. Denar demand deposits of non-financial companies and denar and foreign currency demand deposits of households made the largest contribution to the quarterly growth of deposits of non-financial entities.
According to the data and perceptions presented in the Report, during the first nine months of 2018, the banks reported a positive operating profit. The main generator of the improved financial result included lower costs for impairment that reflected the banks’ activities for collection of nonperforming loans, primarily in the first and the second quarter of 2018. ROAA and ROAE reached solid levels of 2.2% and 19.5%, respectively. Hence, the profit growth was due to one-off factors, but also to the regular banks' activities.
The Report, among other things, also noted that in the third quarter of 2018, the growth of nonperforming loans slowed down significantly, whereby the share of these loans in total loans to the non-financial sector hit a record low of 5%. Nonperforming loans to households increased, but at a slower pace compared to the previous quarter, while total non-performing loans in the portfolio of non-financial companies remained almost unchanged.
The Council has also noted that, as indicated in the Report, the liquidity risk in the third quarter mitigated as a result of the increased share of liquid assets in total assets of the banking system, while the capital adequacy ratio was 16.3%, indicating a solid solvency level.
In general, at the session, the Council has concluded that the banking system performance was generally solid in the third quarter of 2018. The NBRM will continue to monitor the situation and take appropriate actions, when needed.
At today’s session, the Council has also adopted the Plan of Activities of the National Bank of the Republic of Macedonia for 2019, which lists activities planned for the coming year, aimed towards the achievement of the strategic objectives set in the NBRM Strategic Plan for 2019-2021. Among the central bank operation regulations for the following year, the Council has also reviewed and adopted the Medium-Term Plan of Activities of the NBRM Internal Audit Department for the period 2019-2020, the Plan of Activities of the NBRM Internal Audit Department for 2019, as well as the Annual Financial Plan, the Annual Investment Plan and the Annual Public Procurement Plan for 2019.
The Council has also discussed other matters within its jurisdiction.
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