BANKING SECTOR REVIEW: 4th quarter of year 2023

The financial indicators of the banking sector was stable and improving, as the total assets of the sector increased by 23 percent compared to the same of the previous year. Non-performing loans has decreased. Starting from 2023, due to interest being calculated on demand deposits, which had a significant effect on the increase of MNT deposits. Bank loans aimed at supporting the economic sectors continue to grow.

The decision to keep policy rates at a high level to curb high inflation rates yielded positive results as the inflation rate came down to a one-digit level.

Purchasing power of the MNT increased due to the surplus in balance of payments, especially the current account. Due to the increase in exports of mining products, the national budget resulted in a surplus.

The swift resurgence of the mining sector, along with the corresponding improvements in the transport and logistics industry, coupled with the sustained expansion of the service and trade sectors, exerted a noteworthy influence on the 7 percent GDP growth. On the other hand, the agriculture sector declined due to adverse weather conditions.
Relying on the increase in the price and quantity of mineral products from mining and planning for high economic growth and approving the budget income and expenditure at a high level as a result was an overhasty decision, as the saying goes “Don’t count your chickens before they’re hatched”.
The implementation of the interest rate reduction strategy is insufficient.

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