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12/03/2018

The Council of the Central Bank of Montenegro held the twenty-fourth session today, chaired by the Governor Mr Radoje Žugić, PhD.

The Council discussed and adopted the Report on Central Bank of Montenegro Business Activities and Policy Implementation for December 2017, which concluded that the activities of the Central Bank in this period were carried out in line with the commitments established by the Central Bank of Montenegro Work Programme for 2017.

The Council has established a Draft Law on Voluntary Financial Restructuring of Debts towards Financial Institutions, which proposes extending the validity of this law for another year, with the aim of creating the preconditions for further stimulation of the debt restructuring process. Namely, the implementation of this law in the period from June 2017 to February 2018 resulted in debt restructuring in the amount of 23.7 million euros, which indicates the justification for the initiative to extend its validity. Also, according to the latest available data, non-performing loans at the end of December 2017 amounted to 197 million euros and accounted for 7.3% of total loans. Compared to December 2016, non-performing loans were lower by 20.8%.

In order to harmonize with the Directive 2011/7EU on combating late payment in commercial transactions, the Council has today established a working version of the Draft Law amending the Law on Default Interest Rate.

The Council also adopted the Decision on reporting on lending activity. This decision provides assumptions that the CBCG implements the recommendation of the European Commission and continuously implements credit rating surveys in order to monitor credit dynamics in Montenegro. By entering into force of this decision, the banks with headquarter in Montenegro will be obliged to submit information on credit activity, on the prescribed form, to the CBCG on a quarterly basis, while the CBCG will, in accordance with the principles of transparency of operations, have the obligation to provide information on the credit activity of banks on the aggregate level published on its website.

The Council discussed and adopted the Quarterly Report on Banks and MFI`s Operations, with the Information on implementation of operational objectives of banks for reducing the level of non-performing loans for the fourth quarter of 2017. It was noted that the operations of banks during the last quarter of this year were characterized by the growth of all key balance sheet positions, so at the end of 2017, the annual growth of total assets increased by 10.34%, loans and receivables by 13.24%, deposits by 13.64% and total capital by 5.87%. Interest rates recorded further decline, so the weighted average effective interest rate on total loans recorded a decrease from 7.45% at the end of 2016 to 6.81% at the end of 2017, while the average weighted effective interest rate on new loans fell from 6.27% to 6.23% in the observed one-year period. The solvency ratio at the aggregate level was 16.37%, which is above the regulatory minimum (10%). At the end of 2017, the banks showed a positive financial result in the amount of 35.1 million euros. High level of liquidity and solvency of the banking sector, along with the stated tendencies, contributes to its smooth functioning, and thus to preservation and strengthening of financial stability.

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