The National Bank of the Republic of Macedonia Council has held its tenth session today. 

Skopje, 27 October 2011

Press release of the NBRM

The National Bank of the Republic of Macedonia Council has held its tenth session today. 

At the session, the Report on Banking System of the Republic of Macedonia in the second quarter of 2011 has been discussed and adopted, and it was ascertained that the banking activities kept on expanding in the second quarter of 2011. The total assets of the banking system registered an annual growth of 12.3%, and amounted to Denar 317,162 million, as of 30.06.2011. The deposits of nonfinancial entities remained the most significant source of funding the banking activities, registering quarterly and annual growth of 1.8% and 9.6%, respectively. As of 30.06.2011, the quarterly and annual lending growth rates equaled 3% and 8.8%, respectively.

In the second quarter, the share of nonperforming credits in the total credits reduced from 9.4% on 31.03.2011 to 9.3% on 30.06.2011. While we still cannot claim that the quality of credit portfolio of the banking system improved, it is certain that the process of its deterioration halted.

The banking system liquidity is stable and relatively high owing to the outstanding stability of the banks' deposit base and the permanent uptrend of the liquid assets. On 30.06.2011, the liquid assets of the banking system went up on quarterly and annual basis, by 0.6% and 19.8%, respectively and reached Denar 91,459 million. Such level of liquid assets ensures considerable coverage of household deposits and of total short-term liabilities. 

The banking system maintains relatively high and stable solvency and capitalization, on ongoing basis. On 30.06.2011, capital adequacy ratio of the banking system equaled 16.5%. Stress-test simulations show satisfactory resilience of the banking system to various shocks, with the capital adequacy being above the 8% requirement in case of all simulations. 

After the loss being registered in the first quarter of 2011, at the end of June 2011 the banking system reported a cumulative profit of Denar 357 million, which is by Denar 140 million or by 28.2% lower compared to the first half of 2010. Nevertheless, amendments to the regulation concerning the method of calculating the minimum liquidity (adopted by the National Bank Council in September 2011) are expected to have positive effect on the banks' earnings, since they provide additional funds available to the banks to be invested in high-yield placements, particularly in private sector. 

At this session, the NBRM Council was briefed on the recent macroeconomic developments. Inflation data show additional price cut in the economy, and accordingly, deceleration of the annual inflation rate (3.4% in September 2011). Thus the average annual inflation rate equaled 3.6% in the third quarter, which is below the NBRM projection (4.4%) made in July, primarily due to the faster downward food price adjustment. The average annual inflation rate reduced to 4.1% in the January - September 2011 period, with the core inflation rate remaining low and stable. Recent data indicate monthly contraction of the physical volume of industrial production in August (by 3.7% seasonally adjusted), making the annual growth decelerating significantly to 0.9%. Cumulatively, the industrial production reported high annual growth of 7.5% on average for the first eight months of 2011. 

The latest available balance of payments data show current account deficit of Euro 7.9 million or 0.1% of GDP in July 2011, which is an annual deterioration of 0.6 percentage points of GDP, particularly due to the deteriorated trade balance. The capital and financial account reported net outflows of 0.6% of GDP (0.8% of GDP in July 2010), creating the need of engaging foreign reserves to finance the balance of payments gap. August 2011 data show 1.7% trade deficit reduction on annual basis, and in August - September period, the currency exchange market reported higher net purchase of foreign currency on annual basis. Thus, on 30.09.2011, the gross foreign reserves stood at Euro 1,847.8 million, which is by Euro 133.3 million more, compared to the end of the preceding year.

After the stagnation in August, September 2011 witnessed resumption of credit market activities that contributed to moderate acceleration of the annual growth rate of total credits to 8.1% (7.9% in August). Such developments were registered amid deceleration of the annual growth rate of the total deposit potential to 10.5% (12.4% in August) resulting from the slower annual corporate deposit growth, while the annual growth rate of household deposits accelerated moderately.

The National Bank Council passed the Decision on amending the Decision on the methodology for calculating the percentage rate of total costs. These amendments to the Decision closely specify the costs for additional services to be included in the calculation of the percentage rate of total costs, where the calculation takes into account only costs related to the consumer loan agreements, the creditor is aware of. 

The National Bank Council also adopted other acts regulating its activities. 

Governor's Office