30 December 2020

On 28 December, the National Bank Council held a regular session and adopted the Report on the risks in the banking system in the third quarter of this year. Moreover, it was determined that the banking system maintained its stability and resilience to shocks, in conditions of prolonged and still unpredictable health crisis.  

The indicators of solvency of the banking system remain stable, whereby the capital adequacy ratio equals 16.9%. Over 90% of the own funds account for the Common Equity Tier I capital, which represents the highest-quality segment of the banks' regulatory capital.

Indicators of liquidity of the banking system improved. Thus, the shares of the liquid assets in the total assets, as well as the coverage of household deposits and short-term liabilities with liquid assets quarterly increased by 0.4, 1.7 and 0.5 percentage points, respectively and as of 30 September 2020 amounted to 29.9%, 58.9% and 50.3%, respectively. The placements in government securities and short-term assets with foreign banks made the greatest contribution to the increase in liquid assets, in conditions of further growth of deposits of non-financial entities and solid quarterly increase in the profits of the banking system. Deposits of non-financial entities increased by 6.6% on an annual basis. To maintain the deposit activity of the banking system at a stable level in times of crisis, in addition to the maintained confidence of the public in the banking system, the economic measures of the government for dealing with the COVID-19 crisis are also important, which cover liquidity support to companies and households, in order to maintain the liquidity of companies and the purchasing power of households. 

The measures taken by the National Bank in the first half of the year significantly contributed to the creation of liquidity in the banking system, which is used to provide support to the Macedonian economy, mainly through the maintenance of credit flows and the credit cycle by banks. The credit activity of the banking sector continues to grow, at a rate of 6.7% on an annual basis.

National Bank Council also amended the Strategic Plan of the National Bank of the Republic of North Macedonia for the period 2020 -2022 by including activities for monitoring and managing the risks from climate changes, as well as an analysis of the impact of the risks arising from climate changes on the banking system.

Climate changes, as one of the greatest global threats, become increasingly important in the activities of central banks, as socially responsible institutions. In recent years, central banks increasingly discuss the impact of climate changes on financial stability and monetary policy. The effects of climate changes and the economic costs they incur can have negative transmission effects on the financial system. At the same time, climate changes affect monetary policy, and in this context, central banks start changing their mandates, including climate changes as part of their strategic objectives.

Taking into consideration these trends, the National Bank envisages commencement with activities for incorporating measures that will provide support to “green finance” in the achievement of the main goals. Also, the National Bank envisaged stimulation and development of the research activity in the area of “green finance”, as an area that should be incorporated into the priorities of every socially responsible institution, and in order to contribute to the creation of a “green” and sustainable economy, which would ultimately provide a higher standard of living and improvement of the quality of life for its citizens.

At its meeting, the Council also adopted the Work Program for 2021 and the Medium-Term Work Program for the period 2021-2023 of the Internal Audit Department, as well as the Annual Financial Plan, the Annual Investment Plan and the Annual Public Procurement Plan for 2021. 

The Council has also discussed other matters within its jurisdiction.