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06/11/2018

Thirty-third session of the Council of the Central Bank of Montenegro was held today, chaired by the Governor Mr Radoje Žugić.

The Council discussed and adopted the Report on the Operations and Implementation of the Central Bank of Montenegro's Policy for September, which provides an overview of key activities of the Central Bank during the said month. It was stated that the activities of the Central Bank carried out during September 2018 were realized in accordance with the planned obligations established by the Central Bank's Work Program for the current year.

According to the final data of MONSTAT, the real growth rate of Montenegro's GDP in 2017 is 4.7%, while according to the preliminary data in the first and second quarters of 2018; the growth was 4.5% and 4.9% % compared to the same period of 2017. It was noted that international institutions (European Commission, IMF, World Bank, EBRD and others) forecast the growth of Montenegrin GDP in 2018 and that their projections from 3% to 3.8%.

According to data from the Report, the real sector records positive trends expressed through high growth rates, especially in the sectors of energy, tourism, construction and transport. 

Regarding the banking sector, a further decline in non-performing loans was recorded in September, thus the share of NPLs declined to 6.7%. Also, the fall in the weighted average effective interest rate was registered, which amounted to 6.4% at end-September 2018, which is 0.58 percentage points lower than in September of the previous year.

The Council discussed and adopted the Report on Survey on Banks’ Lending Activity for the second quarter of 2018. This is a new type of publication that will be published regularly by the Central Bank of Montenegro on a quarterly basis with the aim of gaining insight into the key determinants of supply and demand for loans of the corporate sector and households.

The results of the survey indicate that in the second quarter of 2018, according to banks' estimates, credit standards for the corporate sector and households have been alleviated. Banks expect easing of standards for micro, small and medium-sized enterprises and households also during the next quarter, while lending to large companies expect a slight tightening of lending standards.

The easing of credit standards was largely affected by competition in the banking sector and increased willingness to take risks.

In the second quarter, lending conditions for the corporate sector and households were more favourable compared to the previous quarter, especially on the basis of lower margins, commissions and fees. Banks expect a continuation of easing lending conditions in the next quarter, except for the requirements for collateral in lending to the corporate sector, where they anticipate tightening.

Banks estimate that in the second quarter demand for loans of the corporate sector and households has increased. The demand of the corporate sector was driven by the need to finance capital investments, working capital and restructuring of existing debts, while the main factors of demand growth in the households’ sector was the need for refinancing the existing debts, as well as the purchase of real estate and durable consumer goods.

At today's session, the Council also discussed other current issues from the domain of its competence.