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08/04/2019

Due to increased interest of the media about the developments in the banking sector, we deliver the following

MEDIA STATEMENT

The banking system in Montenegro is stable, recording positive trends, despite the introduction of bankruptcy in Atlas Bank and IBM Bank.  

System-level indicators, referring to 13 licenced banks, point to a very stable performance, which, inter alia, is characterized by:

• Solvency ratio of 17.29% as at 31 December 2018 being significantly above the minimum prescribed level of 10%;
• Level of non-performing loans of 5.04% as at 28 February 2019 with past due loans over 90 days of 2.91%, which is an indicator that can be compared to the level prior to the financial crisis. 

Based of the latest available system level data (28 February 2019), the key balance sheet items recorded annual growth, as follows: assets 7.01%, loans 12.00%, deposits 7.64% and capital 7.37%.

Deposits record a constant uptrend. Observing the development from 30 November 2018, i.e. the latest reporting period prior to the introduction of interim administration in IBM Bank and Atlas Bank, up to 28 February 2019, the uptrend of the deposits from the previous period is evident, despite their seasonal decline at the end-January 2019. 

It is noticeable that certain media and analysts interpret the data on the level of total deposits and liquid assets in an incorrect manner, without taking into account seasonal and cyclical impacts and/or comparing incomparable data relating to the different number of banks in the system.

For the purpose of objective interpreting of the mentioned categories, the following overview provides their level on comparable dates, excluding data relating to IBM Bank and Atlas Bank:

As can be seen from the table, total deposits with 13 banks at end-February 2019 were 2.75% higher compared to end-November 2018, i.e. 2.22% higher compared to end-January 2019.

The January decline in total deposits is a result of seasonal fluctuations confirmed by the fact that the fall in total deposits at the system level occurred during January 2018 as well compared to the level of total deposits at end-2017 (from 3.3 million to 3.2 million euros), after which the uptrend of total deposits continued.

When it comes to the deposit structure, from 30 November 2018 to 28 February 2019, according to the data for 13 banks, there was an uptrend in both categories of non-resident legal entities and resident legal entities, while the decrease in total deposits of resident natural persons was recorded.

The fact that both categories of non-resident deposits are increasing points to a high degree of trust in the banking and financial system, as well as the business system in Montenegro among non-residents, preparing in this way to continue the trend of investing in Montenegro.

Montenegro's banking system is exceptionally liquid. Liquid assets for 13 banks in the system increased by 19.6 million euros or 2.13% as at 28 March 2019, compared to the day the interim administration was introduced at IBM Bank and Atlas Bank. 

We remind that, according to the strict CBCG definition, liquid assets consist of cash, giro account funds, demand deposits with banks and half amount of the reserve requirement. Therefore, there is no analytical sense to follow the trends of certain categories of liquid assets, that is, cash, giro account funds and demand deposits with banks, from the point of view of their impact on the liquid position, which some media did. 

You can find a complete analysis of indicators of Montenegro's banking system on the following link.