The Financial Stability Committee held its session

Skopje, 3 November 2020 

The financial system has successfully responded to the initial blow of the COVID-19 crisis, being ready to cope with the upcoming challenges. Financial regulators are closely monitoring the developments and the development of COVID-19 crisis, being prepared to adjust their policies, thereby guaranteeing financial stability.

This is one of the conclusions from yesterday's session of the Financial Stability Committee, wherein, the assessments and views for each of the financial system segments, were presented. The session was chaired by the Governor of the National Bank, Anita Angelovska Bezhoska, being also attended by the Minister of Finance, Fatmir Besimi, the President of the Securities and Exchange Commission, Nora Aliti, the President of the Council of Experts of the Agency for Supervision of Fully-Funded Pension Insurance, Maksud Ali and the President of the Council of Experts of the Insurance Supervision Agency, Krste Shajnoski.

Referring to the developments in the banking system, Governor Angelovska Bezhoska stressed that according to the latest indicators, at the end of the third quarter, the performance of the system was better than it was before the start of the COVID-19 crisis.

“The system capacity to deal with the shocks also increased, registering substantial capital and liquidity buffers, and at the same time, it is important that the efficiency indicators are solid. Moreover, at the end of September, the level of non-performing loans was at historically the lowest level, accounting for 3.4%." – said Angelovska Bezhoska.

At the session it was also pointed out that having in mind the features of COVID-19 crisis the economy is going through, what is important is that there were no significant changes in the euroization rate of the banking system - it was at almost the same level as it was a year ago, whereby foreign currency deposits accounted for around 42% of the total deposits, which is an indicator of the perceptions of the economic agents.

The Minister of Finance, Fatmir Besimi, pointed out that the Ministry of Finance closely monitors the segment of financial companies and leasing companies for which it is responsible as a regulator, although their share of less than 2% in the total assets of the financial system does not pose a threat to its stability. He pointed out that despite the COVID-19 crisis, this segment of the financial system has been registering positive financial results.

Besimi emphasized that maintaining the stability of the financial sector in times of COVID-19 crisis is of particular importance, including for the real sector, because finances are the lifeblood of the economy, i.e. the driver of economic activities.

In accordance with the expectations of the Ministry of Finance, and based on the market movements, the activity of the financial companies will intensify in the forthcoming period.

The President of the SEC, Nora Aliti, by referring to the activities undertaken by the SEC on a regular basis, pointed out that the foundations which the securities market relies upon, were estimated as sound, however, the changeable and unpredictable environment requires further close monitoring of the trends and the potential risks in the light of preserving the stability and the security of the capital market in the coming period.

"On a nine-month basis, the total amount of turnover on the domestic market is higher by 24% compared to the same period last year. MBI10 index, upon the evident price fluctuations and the value decline in the first quarter, registered a slight oscillation in the remaining part of the year, registering slight decline of 3.52% on annual basis, i.e. the lowest drop compared to the major regional stock market indices." - Aliti pointed out.

President of the Council of Experts of Agency for Supervision of Fully-Funded Pension Insurance, Maksud Ali, said that the fully-funded pension insurance remains stable and transparent with identified risks, which are being analyzed and controlled on regular basis and in accordance with the regulations, with special attention being put on investing in the Pension Funds’ assets.

“However, the uncertainty in the fourth quarter this year remains quite high. The second wave of the virus can cause new fluctuations on the financial markets, thus also affecting the value of the Pension Funds’ assets. The development of technology, on the other hand, requires rapid adjustment of the regulations to the needs of the members of the Pension Funds, as well as the supervision of the pension companies, in order to both minimize the risk of the virus spread and protect the public health, while ensuring business continuity and smooth pension insurance-related operations", Ali pointed out.

President of the Council of Experts of the Insurance Supervision Agency, Krste Shajnoski, underlined that the financial standing of the insurance companies improved in the first half of the year.

 “Conservative policies and regulations on valuation of technical provisions and investments of assets covering the technical provisions, as well as the high quality of instruments included in the calculation of the capital of insurance companies, are a good basis and guarantee for maintaining solvency in the operations of companies” Shajnoski said.

At the session, among other things, it was pointed out that in the recent period there have been disinformation and claims about certain financial institutions, which not being substantiated by facts. Given the possible consequences of such phenomena on the financial system, it was pointed out the need for joint efforts of financial regulators to prevent such incidents to produce risks, which would be an additional investment in further strengthening financial stability. It was also emphasized that it is important for economic agents to follow the reference and official sources of information about financial institutions and all segments of the financial system.

At the end of the Committee's session, the decisiveness of the financial regulators for further coordinated monitoring of the developments in all segments of the financial system was emphasized.