Central Bank of Montenegro Council Meeting
31/05/2024
Today, the Council of the Central Bank of Montenegro held a meeting chaired by its Governor, Ms Irena Radović.
Council members discussed the Central Bank of Montenegro Annual Report for 2023. The Report stated that all CBCG activities in 2023 followed the planned obligations. In addition to macroeconomic and banking sector analyses, the Report contains an overview of the CBCG’s regulatory and supervisory activities.
It highlighted that the banking sector in Montenegro was stable and continuously supervised by the CBCG during 2023. In addition to off-site and on-site supervision of banks’ operations, the CBCG monitored and analysed potential risks and acted preventively in the case of identified vulnerabilities to preserve financial stability. It further stated that the banking sector operated profitably in 2023, with high liquidity and good capitalisation, while all key balance sheet positions - loans, deposits, assets and capital - recorded annual growth. Total assets grew and slightly improved while the share of non-performing loans decreased. The Report highlights the intensive CBCG’s regulatory activities on further harmonising the domestic legislative framework with the EU acquis. It particularly emphasises the CBCG’s significant contribution to improving the system of detecting and preventing money laundering and terrorist financing, which MONEYVAL also recognised. It noted the successful financial operations of the CBCG in 2023, which resulted in a net profit of 16.3 million euros.
The Financial Stability Report 2023 stated that systemic risks at the end of last year were moderate and slightly lower than at the end of 2022. The document states that the risks mainly resulted from the changes in the international environment and that the strong Montenegrin economy’s growth of an estimated 6% positively impacted the financial system’s stability.
The Council also adopted the Price Stability Report for 2023, which analysed the inflation trend in Montenegro during the previous year and provided a forecast for the current year. After 2022, when Montenegro recorded the highest annual inflation rate since it restored independence in 2006, price growth slowed down during the last year. According to MONSTAT data, consumer prices in January - December 2023 were, on average, 8.6% higher compared year-on-year. Prices under “food and non-alcoholic beverages”, “housing, water, electricity, gas and other fuels”, and “clothing and footwear” contributed the most to price growth. As for future price trends, inflation is expected to continue to decline in 2024, so the CBCG’s expert assessment forecast that inflation would range from 3% to 7%, with a central trend of 5%.
The Council adopted the Decision Amending the Decision on Capital Adequacy of Credit Institutions, which redefines the prudential treatment when calculating missing reserves, starting from 31 December 2024. These amendments are in the context of the EU’s accession, i.e., the closing of negotiation chapters under the CBCG’s competence and providing full regulatory compliance, as well as the alignment with good EU banking and supervisory practices. Acknowledging the dynamic reforms in the accession process, the Decision allows a transition period until 31 December 2025 to adapt credit institutions to this regulatory solution gradually.
The Council passed a decision authorising the payment institution “Montenegro Transfers” DOO Podgorica to provide an additional payment service - the execution of payment transactions, including the transfer of funds to the payment account of payment services users. Moreover, the Council passed a decision revoking the license to the microcredit financial institution “Credit Plus” DOO Podgorica today because this financial services provider did not start operations defined in the license within the legally prescribed time limits, and it underwent voluntary liquidation in the meantime. Namely, the Law on Financial Leasing, Factoring, Purchase of Receivables, Micro-Lending and Credit-Guarantee Operations stipulates that the CBCG revokes the licence of a financial service provider who fails to start operations within six months from the date of licence issuance.
At today’s session, the Council considered and adopted the Quarterly Report on the operations of banks in Montenegro for Q1, the Report on Bank Lending Survey Results for Q1 2024, the Information on the bankruptcy activities of Atlas banka AD in bankruptcy from 5 April 2019 until 31 December 2023, Report on the bankruptcy proceedings of IBM Bank in bankruptcy for the period 4 January 2019 until 31 December 2023, and other materials under its competence.