High-quality cooperation between banks and the regulator leads to a stronger and more profitable banking sector
14/06/2017
The Central Bank of Montenegro Governor, Mr Radoje Žugić, PhD, with his associates met with representatives of banks and financial institutions in Montenegro today.
In his introductory speech, opening the meeting, Mr Esad Zaimović, President of Association of Montenegrin Banks, said that today`s coordination is a continued successful cooperation with the CBCG and the opportunity for an open dialogue between the bankers and the regulator on a number of topics important for functioning of the banking and financial system as a whole.
Governor Zugic underlined that the CBCG has a continuous communication and cooperation with all banks in Montenegro, stressing this practice should remain in the upcoming period as well, with the aim of mutual acting to further develop banking sector and strengthen financial stability as well as directly improve the economy. “Strong, sound and profitable banking sector is the best support to the overall economy development” mentioned the Governor Žugić.
The Governor also looked back on the condition in the banking sector, observing it to be characterized by an increase in assets, loans, receivables and capital and a slight drop in deposits. Credit activity of banks intensified while the share of non-performing loans in total is constantly decreasing, currently being 9.25%. Even though lending and deposit interest rates have downward trend, the Governor pointed out to the fact that these are still high and represent an “expensive input for the real economy”. The mentioned indicators prove the banking sector to be stable, even though having minor vulnerabilities and risks at the individual level, the Governor argued.
The Governor Žugić presented the current activities in the CBCG, primarily relating to regulation improvement, introducing European standards and the best practice.
The representatives of the banks were mainly interested in the new legal regulations and their implementation, whether these, and to what extent will have impact on the amount of handling charges. The Governor mentioned that the current improvement in regulation and implementation of the EU standards are determined by the process of joining the EU, therefore representing obligation of the State on the path to European integration, but he also mentioned that the CBCG will take care that these activities neither jeopardize profitability of banks nor the banking sector stability.
The representatives of banks showed their readiness to work with the regulator in improving legal regulation and implementation of the standards, offering their knowledge and experience to contribute to creating more favourable environment and better system functioning.
The participants at the meeting stated that collaboration between financial and banking system in Montenegro is of a high-quality and agreed to further intensify it in the upcoming period.