Today, the National Bank of the Republic of Macedonia Council held its thirteenth session.

Skopje, 20 December 2012

Press release of the NBRM

Today, the National Bank of the Republic of Macedonia Council held its thirteenth session.

At the session, the National Bank Council reviewed the Report on the Banking System of the Republic of Macedonia in the third quarter of 2012. The conclusion was that the banking system, even in an external environment full of great challenges, managed to maintain its liquidity and solvency, and thus its stability and reliability.

Liquid assets, which cover nearly 60% of total household deposits and 42% of total deposits, continue to represent one third of the total assets of the banking sector. Specific change in the liquid assets of the banking system in the third quarter is the growth of banks' assets on accounts in foreign banks and the reduction of their investments in securities.

High solvency is the second pillar of the banking system. As of September 30, 2012, the capital adequacy ratio is 17.1% which is twice the statutory minimum of 8%. At the beginning of the third quarter, the new methodology for capital adequacy began to be applied, which enabled better connection of the banks' risk profile with the regulatory capital, but it did not cause significant effects on the capital adequacy ratio.

Lending continued to grow, both on a quarterly and on annual basis, but still at a slower pace. This slowing of total loans is one of the factors that have caused the rate of non-performing loans to rise to 10.9% as of September 30, 2012. However, the profitability of the banking system continues to strengthen, resulting from the increase in the net interest income. Rates of return on assets and equity increased and as of September 30, 2012 they amounted to 0.3% and 2.3%, respectively. The operational efficiency of the banks has also improved.

 At today's session, the National Bank Council adopted the Decision on amending the Decision on risk management, which will allow the National Bank supervision to have a better insight into the individual categories of risks to which banks are exposed. Namely, so far the banks have also been required to determine a certain level of internal capital to cover an individual risk to which the bank is or may be exposed throughout its work, and this Decision more clearly defines the process of determining the internal capital. When doing this, banks establish procedures for a comprehensive assessment of capital adequacy, associated with their risk profile, but also with their strategy for maintaining the capital level. Internal capital is a supplement to the regulatory capital and its determining is mainly based on banks' internal methods and procedures. The process of determining the internal capital is also qualitative, and the National Bank evaluates its suitability for individual banks, given the clearly defined guidelines in the Decision.

The Council also adopted the Methodology for recording and valuation of accounting items and for preparation of financial statements, in order to achieve compliance with the amendments to the International Financial Reporting Standards agreed by the International Accounting Standards Board and whose effective application in commercial banks starts from January 1, 2013.

At the session, the Work Program of the National Bank of the Republic of Macedonia for 2013 was adopted, which is a detailed elaboration of the activities planned for the next year, for the purpose of more efficient monitoring of the status of implementation of the Guidelines for the operation of the National Bank of the Republic of Macedonia in 2013 and the identified strategic objectives. Within the regulations governing the operations of the National Bank of the Republic of Macedonia for the next year, the Council considered and adopted the Work Program of the Internal Audit Department for 2013 and the Mid-term Internal Audit Program for 2013-2015, as well as the Financial Plan and the Investment Plan for 2013.

At today's session, the Council also discussed other issues within its jurisdiction.

Governor's Office