Meeting of the Financial Stability Council
20/05/2024
Today, the Financial Stability Council held its 68th meeting chaired by Ms Irena Radović, the CBCG Governor and the Council Chairman, and attended by the Council members Mr Novica Vuković, the Minister of Finance, Mr Željko Drinčić, the President of the Capital Market Authority, and Mr Marko Ivanović, the President of the Insurance Supervisory Agency’s Council. The Director General of the Deposit Protection Fund, Mr Vojin Vlahović, also attended the meeting at the Governor’s invitation.
At today’s meeting, the Council discussed the Financial Stability Council’s Report for 2023. The document highlighted that financial stability was preserved during the previous year despite moderate risks stemming from international environment challenges (geopolitical situation, reference central banks’ non-standard monetary policy, etc.). The document noted that the strong growth of the Montenegrin economy for the third consecutive year positively impacted the overall system’s stability. Montenegro’s financial sector showed resilience and remained stable during 2023, providing strong support for economic recovery.
Council members discussed the Information on Financial Stability for Q1 2024. Data for Q1 2024 indicate growth in industrial output and retail trade turnover (4.9% and 6.7%, respectively), while the number of tourist arrivals and overnight stays decreased by 12% and 19.1%, respectively. In Q1, inflation accelerated, and consumer prices in March 2024 were 0.5% higher than in the previous month and 5.5% higher compared to March 2023.
Preliminary Ministry of Finance data for Q1 2024 show that source budget revenues were 8.6% higher than the plan and 6.6% compared year-on-year.
The banking sector was characterised by high liquidity and good capitalisation in the first quarter of the current year. At the end of March 2024, aggregate bank assets amounted to 6.6 billion euros, showing an annual growth of 3.7%. The share of NPLs in total loans was 4.9% at the end of March this year, with an annual decrease of 0.7 percentage points.
Total loans amounted to 4.3 billion euros at the end of Q1 2024, recording 11% annual growth. Observed through the level of newly approved loans, banks’ lending activity during the first three months of this year increased 33% compared year-on-year.
During the first three months of 2024, the insurance sector recorded a 2.6% increase in gross invoiced premiums compared to the previous year.
The Council assessed the systemic risk to financial stability as moderate, and it recommended continuing to monitor the present risks carefully, especially given the still-present uncertainty in the market.
Governor Radović informed the Council members that the CBCG, in cooperation with the line ministries, prepared and sent to the European Commission for its opinion the draft application for expanding the SEPA’s geographical area to Montenegro. Moreover, she informed the Council members about her recent visit to Brussels and meetings with the Chair of the European Payment Council and senior officials of the European Commission, who expressed satisfaction with Montenegro’s current progress in preparations for joining SEPA and the readiness to make efforts to encourage our country’s faster integration into this system.
At today’s meeting, the CBCG, the Insurance Supervision Agency, and the Capital Market Commission announced the signing of a cooperation agreement. The agreement aims to improve the collection of statistical data and information for monetary and financial statistics needs.