The National Bank of the Republic of Macedonia Council discussed on several issues within its operating area at the session held today.

Skopje, 24 December 2009

Press release of the NBRM

The National Bank of the Republic of Macedonia Council discussed on several issues within its operating area at the session held today.

The Council adopted the Report on the Banking System of the Republic of Macedonia in the third quarter of 2009. In the third quarter of 2009, the number of banks remained unchanged, while the number of savings houses reduced by one, and on September 30,2009 the banking system comprised of eighteen banks and ten savings houses. In the third quarter of 2009, the banks' activities in the Republic of Macedonia were influenced by the gradual stabilization of the flows in both the global and the domestic economy, lower impact of the psychological pressures in the decision-making by the economic entities, as well as the continuing harmonization of the banks with the macro prudent measures undertaken by the NBRM. In such conditions, the total assets of the banking system, as well as the deposits of the non-financial entities continued to increase gradually, as a trend that commenced at the end of the first half of 2009. On September 30,2009, the total assets of the banking system reached the amount of Denar 256,979 million, which is quarterly rise of 3.5%. This growth rate points to an acceleration in the banks' assets growth compared to June 30,2009, when it registered a quarterly growth rate of 0.6%. The deposits of the non-financial entities, the quarterly rate of which is positive for the second consecutive quarter and it equals 4.3%, were the main driving force of the increase in the banking activities. On September 30,2009, the total deposits of the non-financial entities amount to Denar 184,220 million. The trend of deposits' currency transformation, in favor of the foreign currency deposits, continued also in the third quarter of 2009.

In the third quarter of 2009, certain stabilization of the banks' credit activity was registered. The total credits of the non-financial entities registered a decrease of only 0.05% compared to June 2009 (opposite to the quarterly drop of 0.6% on June 30,2009). Despite the improved prudence in the banks' credit activity conduct, certain deterioration in the credit portfolio quality occurred, which is a reflection of the hampered business conditions of the domestic credit users, as well as the strengthening of the process of the so-called "maturing" of the credit portfolio. On September 30,2009, the total exposure classified in the categories denoting higher risk (risk categories C, D and E) went up by 10%, on a quarterly basis. The share of this exposure in the total banks exposure to credit risk equals 8.2% and it registers a quarterly rise of 0.6 percentage points. The deterioration in the quality of the credit risk exposure is more evident with the sector "enterprises", than with the sector "households". In the third quarter of 2009, the liquidity of the banking system improved, which, to large extent, is a prudent response of the banks to the enhanced risks in their operating. The banks compliance with the NBRM requirement for maintaining minimal liquidity level introduced at the beginning of 2009, also influenced.  On September 30,2009, the banks' liquid assets equaled Denar 59,037 million, which is more by 18.5% compared to June 30,2009. The influence of the banks' exposure to the currency and other market risks in the spectrum of risks the banks face with in their operating, is still lower. The total gain at the level of the banking system registered in the first nine months of 2009 equals Denar 1,348 million and it is less by 60% compared to the same period of 2008. The rate of return on assets equals 0.7%, while the rate of return on equity equals 6%. The banks have sufficient level of own funds for covering risks in their operating.  At the end of September 2009, the capital adequacy ratio, as a basic measure for the bank's stability, equals 16.5%.

Starting from September 2009, the National Bank amended the procedure for banks grouping, using statistical tools and arguments for statistical homogeneity of the groups of banks. The new limits for banks grouping, according to their size and assets, were set at Denar 5 and 20 billion (the group of small-size banks: assets up to Denar 5 billion, the group of medium-size banks: assets between Denar 5 and 20 billion and the group of large banks: assets exceeding Denar 20 billion).

On the today's session, the NBRM Council revised the Monthly Information 11/2009. In the third quarter, the downward adjustment of the import demand, as well as the positive dynamics of the private transfers, continued, due to which improvement in the external sector is registered. Surplus in the balance of payments' current account was registered, opposite to the negative gap in the current transactions in the same period of the previous year. These changes resulted in significant contraction of the current account' cumulative deficit in the first nine months of the year (5.3% of the GDP compared to 7% in the same period of the preceding year), which is completely covered with net inflows in the capital and financial account. No pressures on the foreign reserves were registered in the third quarter. In conformity with the last available data, on December 11,2009, the gross foreign reserves reached the level of Euro 1,586 million, which is an increase of Euro 91.2 million compared to the end of 2008. The data pertaining to October 2009 indicate further narrowing of the trade deficit (annual drop of 14.7%) and favorable dynamics on the currency exchange market (annual growth in the net purchase on the currency exchange market in the October - November period of over 50%). From the aspect of the activity in the economy, the industrial output in October registered significant annual decrease, and influenced by the low comparison base, the annual decrease reduced to only 0.9%.  However, the structural analysis does not indicate more significant improvement in industry, while the cumulative drop in the volume in the production is still high and in the first ten months it equals 11.3%. For the remaining sectors of the economy, different tendencies - significant movements in the construction, stable movements in telecommunication and intensified decrease in the trade in September were registered. According to the latest data on the inflation, in November the five-month decrease in the prices ceased. However, the annual decrease in the prices is more intensive than expected, and the cumulative change in prices, as of November, is negative and it equals 0.7%.  From the aspect of the movements in the banking sector, the data for November show monthly increase in the banks' deposits and credits (of 0.9%, respectively). Annually, the effect of the lower comparison base contributed to acceleration in the growth rate of the deposit potential (7.2%), while the credits growth rate equals 4.1%.

The Council revised and adopted the Report on the Realization of the Business Program for 2009, as well as the Business Program for 2010, revised and adopted the Annual and the Medium-term Program of the Internal Audit, as well as the Financial Plan and the Investment Plan for 2010. 

The Council revised also other issues within its competence.

Governor's Office