BANKING SECTOR REVEIW: 1st quarter of year 2022

DROUGHT SUMMER IS COMING

The banking sector was relatively stable and growing. Total assets of the sector increased by 6.5 percent compared to the same period of the previous year. However, the quality of individuals loans was gradually deteriorating. From the middle of this year, the benefits and exemptions provided by the government will end and return to normal situation. If economic activity does not improve and individuals real income do not increase, non-performing loans are likely to pose a significant risk.

The economy shrank by 3.8 percent cause of the lack of real export growth due to the zero-Covid policy of our southern neighbor China. In addition, supply and logistics difficulties related to the Russia-Ukraine issue have affected the prices of Mongolia’s main imported goods, causing inflation high.

The only sector that supports the economy at this time is the banking sector. If foreign investment does not increase and the economic sectors remain weak due to the uncertainty, our economy will be in a difficult situation within fall. The Mongolian economy is experiencing the same phenomenon as not having a harvest in fall after the dry summer.

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