Banks Have Enough Equity to Sustain the Main Economic SectorsEconomy
Ulaanbaatar, March 29, 2023 /MONTSAME/. Mongolian Bankers’ Association held a press conference on March 28. “Consumer goods prices are cheaper in Mongolia than in other countries. It could be a leverage for our country to improve competitive advantages.”, N. Sosorburam, Economic Researcher, informed at the press conference.
The real rate of return on deposits was negative during the pandemic, leading people to withdraw their deposits and choose other types of investments, like cryptocurrencies and real estate. With the tendency for interest rates of deposits to increase this year, people are getting interested in traditional and risk-free deposits again.
The foreign trade balance increased by 60 percent last year, compared to 2021. Exports, which were declining in 2022 due to difficulties in transport logistics, started increasing from the middle of that year. As a result, we have gained profitable trade balance. Imports are increasing as well. Overall, a recovery of the mining sector is playing an important role in economic growth.
As of the end of 2022, the performance indicators of the banking sector have shown comparatively sustainable growth. Total assets in the banking sector have reached MNT 3.4 trillion, an increase of 9 percent, compared to the same period last year. In particular, the financial indicators of five systematically influential banks have shown signs of improvement, and two of them have listed their IPOs.
Due to the uncertainty of the domestic and external economic environment, the Central bank raised the policy interest rate to 13 percent in 2022. The increase in the policy interest rate has resulted in slowdown in the loan growth of the banking sector. Although loan growth in the banking sector has slowed, it remains the main engine supporting the economy.
According to the Executive Director of the Mongolian Bankers’ Association L. Amar, banks have enough equity to sustain the recovery of main economic sectors.
At the press conference, G. Bumchimeg, Executive Director of the Banking and Finance Academy, presented the findings of the “Customer Satisfaction Survey”, which was conducted by the Academy in order to identify how reputable the banks are among the customers and their level of trust in banks.
The survey showed that the satisfaction level of bank customers in our country is at the same level as other developing countries. Moreover, the survey has laid bare the need to keep customers informed on banks’ products and services and improve their financial literacy.