BANKING SECTOR REVIEW: 2nd quarter of year 2024

Make hay while the sun shines

The banking sector’s performance is relatively stable with significant growth, and total assets increased by 30% compared to the same period last year. Loans provided by banks play a crucial role in the recovery of economic sectors. Specifically, the amount of loans issued to businesses, especially in the manufacturing, construction, and trade and services sectors, has sharply increased. Due to the slowdown in inflation and the strengthening of the MNT the returns on MNT deposits have increased.

Economic growth reached 5.6% in the first half of the year. Since the beginning of the year, the relatively rapid growth in the mining sector, followed by the transport and storage sectors, has significantly contributed to economic growth. The recovery in the construction and manufacturing sectors has also positively impacted economic growth. However, due to weather conditions, the agricultural sector is experiencing a downturn. Although the country’s foreign currency reserves have increased by 26% compared to last year, the growth in imported goods and products remains high. This level of strengthening in the real exchange rate of the MNT is reducing Mongolia’s competitiveness

It is important for the newly appointed government to remember that summer doesn’t last forever and to allocate budget expenditures efficiently, while taking into account the decline in prices of major export products and the accompanying negative economic consequences.

Key Changes and Future Trends in the Banking Sector in 2024

• The growth in loans provided by banks continues.
• Quality of bank loans has improved.
• The increase in the real returns on MNT deposits has played a crucial role in the growth of MNT deposits.
• The financial performance of the five systemically important banks is relatively strong.
• Money supply has increased by about 30%.
• The return on bank shares is higher than the return on deposits.

Please click HERE to see the full version of the review in ENG.