Skopje, 5 October 2020
Banks expect that credit support for small and medium enterprises as well as housing lending will increase this year. Thus, they do not expect significant changes to the structure of their funding sources, i.e. deposits will remain a dominant funding source. Positive developments are planned for the fintech activities. This is shown in the recently published Survey on Banks’ Perceptions of Business Activities and Risks in 2020 conducted in the first quarter of the year. At the same time, these results show that according to the banks’ expectations, the level of operational risk exposure will not increase.
According to the answers to a set of questions related to loan dynamic and quality, even though the SMEs and housing lending is mostly expected to increase, more than two thirds of banks expect an increase in financing projects and commercial property loans. Most of the banks expect slower growth of consumer loans and deterioration of the quality of uncollateralized consumer loans.
According to the survey, the banks generally expect profitability to improve this year, which is also a significant source of capital and credit support. Therefore, it is noteworthy that the number of banks which indicate greater importance of the commission income related to the sale of insurance policies has increased. However, the results show deteriorated expectations of some banks for the growth of operating costs and expectations for higher impairment costs for their credit portfolio.
Observing bank risks, the survey results show that banks expect similar operational risk exposure as in the period before 2020, i.e. it will not increase. This expectation is based on the strengthened regulation adopted by the National Bank recently, as well as on the security of digital space and data, IT infrastructure, etc.
The fact that the number of banks intending to establish cooperation or have already had cooperation with a fintech company compared to the last year’s survey almost doubled, is a signal that positive developments are planned in the fintech bank activities. The most important motive for the banks that cooperate with fintech companies is attraction of new customers, followed by retention of existing customers, cost streamlining, reducing competitive pressure and following market trends. According to the responses, some banks believe that fintech activities tend to reduce operating costs when dealing with legal entities and natural persons as well as in payment operations.
Majority of banks believe that further consolidation of the banking system is needed and assess the level of competition as high, which is certainly productive in terms of further promotion of their products and services.
The National Bank conducts the Survey on Banks’ Perceptions of Business Activities and Risks once a year, at the end of the first quarter, presenting the assessments and expectations for the upcoming period.