Skopje, 25 April 2000

Press release of the NBRM

The National Bank of the Republic of Macedonia Council decreased the discount rate and the interest rate of the Lombard credits on its LXXXth session held on April 25, 2000. The decrease in the National Bank of the Republic of Macedonia interest rates is in compliance with the projected monetary movements for 2000, achievement of the primary goal of the Central Bank - price stability and expected foreign exchange inflow. The discount rate, which previously amounted to 8,9%, decreased to 7,9% on annual level, whereas the interest rate of the Lombard credits decreased from 18,5% to 17,5%, on annual level. This reduction is a second stage of the dynamical decrease in the National Bank of the Republic of Macedonia interest rates, whereas in the first stage in November 1999 a decrease in the CB bills interest rates was registered.

The Council of the National Bank of the Republic of Macedonia considers that the decrease in the discount rate will result in a decrease in the commercial banks interest rates. The decrease in the interest rate of the Lombard credits is in compliance with the decreasing trend of the interest rates at the money markets, which decreased from 29,9% during the Kosovo crisis to 11,8% nowadays.

These measures supplemented with the measures undertaken in the legislation (Law on Mortgage and Law on Executive Procedure) will create favorable conditions enabling the commercial banks to decrease the lending rates.

The Council reviewed and adopted the 1999 National Bank of the Republic of Macedonia Supervisory Report. Unlike the previous year, the 1999 Report for the first time incorporates an analysis on the Republic of Macedonia compliance with the 25 Core Basel Principles on Effective Banking Supervision. It was concluded that the Republic of Macedonia belongs to the group of the transitional countries which comply with the Basel principles to grater extent. This was also confirmed by the International Monetary Fund Technical Advisory Mission and the World Bank which are of opinion that the percentage of compliance of the Republic of Macedonia with the Basel principles is high.

The 1999 National Bank of the Republic of Macedonia Supervisory Report, this year will be published for the first time, and will be available for the public.

As stated in the 1999 Report, at the end of 1999, the share of private bank capital in the Republic of Macedonia equaled 76,8%. If the two banking institutions which are completely state owned, Republic of Macedonia Development Support Bank and the subsidiary of the T.C. Ziraat Bankasi from the Republic of Turkey are excluded, it can be concluded that as of December 31, 1999 the extent of privatization of other banks in the Republic of Macedonia equals 86,7%. Analyzing bank by bank, excluding the two banks which are completely state owned, the share of the private capital as of December 31, 1999, is ranging from 46,5% to 100% in 5 banks.

At the end of 1999, the foreign capital share in the total capital of the banks operating on the territory of the Republic of Macedonia equaled 19,3%. The bank-by-bank analysis, indicates that the foreign capital is present in 15 banks, and the share thereof ranges from 0,3% to 100%.

With regard to profitability indicators (Rate of Return on Assets and Rate of Return on Equity), at the end of 1999 the Macedonian commercial banks achieved the following results:

·         the rate of return on assets (ROA), estimated as a ratio between the 1999 net profit of the banks and their average assets for the same period, equals 0,8%, and indicates that 100 units of assets of the Macedonian commercial banks generate 0,8 units of net profit. According to the internationally accepted standards, the rate of return on assets should exceed 1% and

·         the rate of return on equity (ROE), estimated as a ratio between the 1999 net profit of the banks and the average equity of the commercial bank in the same period, equals 3,5%. The international standards valid for this indicator are the values in range of 5% to 10%.

   Council of the National Bank of the Republic of Macedonia