The National Bank of the Republic of Macedonia Council adopted the Report on Banking System and Banking Supervision in the Republic of Macedonia for 2005 at its today's session and reached the following conclusions:
Press release of the NBRM
The National Bank of the Republic of Macedonia Council adopted the Report on Banking System and Banking Supervision in the Republic of Macedonia for 2005 at its today's session and reached the following conclusions:
In 2005, the banking system of the Republic of Macedonia was stable and characterized with relatively high solvency and liquidity and significantly higher activity. On December 31, 2005, the banks' total assets reached Denar 140.4 billion, which is an annual increase of 19%. Major generator of the growth in the banks' assets was the deposit potential that surged by 19% on annual basis, reaching Denar 97.9 billion at the end of 2005. The higher financial potential was a ground for substantial lending expansion of 20% to the private sector, thus inducing the overall economic growth in the Republic of Macedonia. Also, the credit risk remains dominant risk in the banks' operations, however registering a permanent trend of mitigation.
The accelerated activity of the banks in 2005 was followed by an improved profitability and efficiency. Thus, in 2005, the banking system in the Republic of Macedonia generated a total gain of Denar 1.7 billion, which is a substantial increase of 37% compared to the preceding year.
The National Bank Council adopted new Rules for the manner and procedure for trading and settlement of securities transactions on over the counter markets. The new rules include treasury bills as a trading instrument on over the counter markets, enabling further development and deepening of the government securities market.
The Council, at its today's session, also adopted a Decision on outright and repo transactions. The outright transactions for purchase and sale of securities between the National Bank and the banks are primarily intended for longer-term liquidity management, whereas the repo-transactions are intended for shorter-term liquidity management by occasional interventions for withdrawing and injecting liquidity. This decision enhances the existing set of monetary policy instruments, aimed at enabling the National Bank to take part on the money and securities markets by the means of outright or temporary purchase or sale of securities.
Taking into account the trend of reducing the interest rates on the money and securities markets, the National Bank Council passed a Decision on amending the Decision on National Bank of the Republic of Macedonia interest rates, reducing the Lombard interest rate from 11.00% to 9.50%.
The NBRM Council was informed on the latest macroeconomic performances of the Macedonian economy. In the January - April 2006 period, the average inflation rate equaled 2.9%, primarily owing to the increase in the cigarette excises at the beginning of the year, and the movement of prices of food products and oil derivatives. The foreign exchange market still registers favorable movements, ensuring ongoing growth in the gross foreign reserves on the basis of net purchase of foreign currency by the NBRM. The average interest rate on the last CB bills auctions maintained shifting around 5.6%. The banks' total deposits and total placements to the private sector still register two-digit growth rates. Thus, in April 2006, relative to the same month of the preceding year, the banks' total deposits went up by 18.1%, given the simultaneous increase in both Denar and foreign currency deposits (of 18.8% and 17.7%, respectively). In April 2006, the annual growth in the banks' total placements to the private sector equaled 21.2%, with an increase being registered in both Denar and foreign currency placements of 15.1% and 43.1%, respectively.
The National Bank of the Republic of Macedonia Council discussed and adopted the independent audit opinion of PricewaterhouseCoopers dooel Skopje on the Financial Statements of the National Bank for the year-ended December 31, 2005 and the NBRM Financial Statements prepared in accordance with the International Financial Reporting Standards.