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26/05/2017

The Central Bank of Montenegro Council held its tenth session today, chaired by the Governor Mr Radoje Žugić, PhD.

The Council adopted the Governor`s Report on Central Bank of Montenegro Business Activities and Policy Implementation for March 2017, Central Bank of Montenegro Macroeconomic Report 2016 as well as Quarterly Report on Banks and MFI`s Operations for the first quarter of 2017.

The Governor’s Report for March 2017 stated that the activities of the Central Bank in this period were carried out in line with the obligations planned under the Central Bank of Montenegro Work Programme for 2017. The Report indicated that credit activity of banks during the first three months in 2017 was higher by 5.5% when compared to the same period of the previous year. Encouraging fact is that the banks approved EUR 146.8 million new loans during March, which was 56.3% more than in the month before, i.e. 21.6% more than in March 2016. A growth in deposits and total capital of banks recorded increase in March while lending and deposit interest rates recorded downtrend on an annual level, for that reason the effective interest rate for the newly approved loans amounted to 7.09% in March, the same being 8.04% in the same month the previous year.

The Council also adopted the Central Bank of Montenegro Macroeconomic Report 2016 giving overview of the most important developments in the previous year recorded in the real, fiscal and financial sector. According to the MONSTAT estimation, Montenegrin corporate sector recorded a growth of 2.5% in 2016, being a small and open system, exposed to overspill from the foreign markets. Increased activities in construction, electric power supply, tourism and transport were recorded in 2016 while the drop was recorded in industrial output and forestry. The annual inflation rate, measured against the consumer price index was 1% in December 2016 while the annual inflation rate in 2016 equalled -0.3%. The banking sector was stable and liquid in 2016, recording a positive financial result at an aggregate level. 

Quarterly Report on Banks and MFI`s Operations for the first quarter of 2017 stated the bank activities in this period were characterized by an increase in assets, loans and receivables as well as a slight drop of 0.5% in deposits. Credit activity of banks was intensified while the share of non-performing loans in total loans amounted to 9.9% at end-March, representing a decrease of 12.8% at an annual level. Solvency ratio amounted to 15.9% at an aggregate level, being over the regulatory minimum of 10%. High level of the banking sector liquidity and solvency, with the mentioned tendencies, contributed to its smooth functioning, thereby preserving financial stability as well. The banks recorded the positive financial result during Q1 amounting to EUR 7.8 million.

The Council members also adopted the Annual Deposit Protection Fund Report 2016 at today`s session.

The Council members closely reviewed The Banking Ombudsman Annual Report 2016examining the condition in the protection of financial rights of clients and guarantors in our banking sector and the activities undertaken by the Ombudsman and other entities, concerning the protection of the mentioned rights.

The Council also passed the Decision on custody operations, defining the receiving, safekeeping and returning bailments for state bodies and organizations, legal entities, representative offices of foreign countries and international organizations in the CBCG vaults. The very important segment of vault operations will be additionally improved with the implementation of the Decision.

The Council also reviewed other current issues under its competence at its session held today.