Today, the National Bank of the Republic of Macedonia Council held its fourteenth session
Today, the National Bank of the Republic of Macedonia Council held its fourteenth session.
At the session, the Council reviewed the Report on the risks in the banking system of the Republic of Macedonia in the third quarter. The Report highlights that the commenced recovery of the real sector in 2013 contributed to the growth of assets and deposit core of banks. Characteristic for the third quarter is that the main generator of the growth in bank deposits was the corporate sector, unlike previous quarters when it was the households. On the other hand, the driver of the growth in lending are still the households, while loans to the corporate sector declined.
It is expected that the further economic recovery will cause gradual strengthening of banks' lending activity aimed at the corporate sector. The monetary policy measures undertaken in the previous period, which pertain to encouraging lending, liquidity management by commercial banks and development of the capital market, will also act in this direction. Beside these measures, it is expected that the additional measure of liquidity risk management will contribute to the increase in the credit support to the real sector.
During the third quarter, the quality of the loan portfolio of the banking system improved, observed from the viewpoint of the reduced non-performing loans. They are still fully covered by the overall impairment, meaning that even in the case of hypothetical full uncollectibility, the solvency of the banks would not be jeopardized.
Prudence in lending is evident also from the fact that in the third quarter, banks directed half of the new sources of funds in liquid instruments, which in turn contributed to the further growth of liquid assets and strengthened liquidity position of the banking system. Capital adequacy has been over 17% for a longer period of time, which is well above the legally prescribed minimum. In the third quarter, the effects of new regulations on the treatment of assets foreclosed on the basis of outstanding claims started to materialize, which led to further growth of banks' own funds.
During the first nine months of 2013 a slight, but continuous improvement in the performance indicators of the banking system was registered, influenced primarily by the growth in the net interest income and the decline in the operating costs. The profits of the banking system realized in this period almost doubled, compared to the profits earned in the same period last year.
Overall, the banking system has maintained its stability and resilience to shocks. Expectations for further developments are optimistic and related primarily to the positive economic developments and their pass-through effect on the performances of banks' customers from the real sector.
At the session, the Work Program of the National Bank of the Republic of Macedonia for 2014 was adopted, as a part of the documents resulting from the strategic planning process, which works out in detail the activities planned for the next year based on the adopted Strategic Plan for the period 2014 -2016, and the Guidelines for the operation of the National Bank.
Under the regulations pertaining to 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 2014 and the Medium-Term Program of Internal Audit for the period 2014-2016. The Council adopted the new Rulebook for the operations of the Internal Audit Department, which provides harmonization with the amendments to the International Standards for the Professional Practice of Internal Auditing, as well as with the recommendations for improving the operations, given by the Dutch Central Bank and the European Central Bank. At today's session, the Council discussed and adopted the Financial Plan, the Investment Plan and the Plan for Public Procurements for 2014.
The Council also discussed other issues within its jurisdiction.
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