The NBRM Council, at its tenth session held today, has discussed and adopted the Report of the Banking System of the Republic of Macedonia for the second quarter and ascertained that the banking system is stable.

Skopje, 4 October 2012

Press release of the NBRM

The NBRM Council, at its tenth session held today, has discussed and adopted the Report of the Banking System of the Republic of Macedonia for the second quarter and ascertained that the banking system is stable.

Compared to the same period of the previous year, the profit surged by 70.8%, due to the higher amount of released impairment, the higher net interest income and the improvement of the banks' operational efficiency.

On a quarterly basis, private sector loans increased, which determined only moderate decrease of liquid assets available to the banks. The share of liquid assets in total assets remained high (30.2%). The enhancement of lending to private sector and the higher demand for government securities reduced the demand for CB bills. 

The bank credit risk, presented through the rate of nonperforming loans, abated in the second quarter due to the higher number of foreclosures. Solvency of the banking system, measured through the capital adequacy ratio, has been high over the entire period and equaled 17.4% at the end of the second quarter. 

In the second quarter, deposits of nonfinancial entities registered a minor fall due to the decrease of corporate deposits. Households' preference to save in Denar in a long run enhanced. At the end of the second quarter of 2012, Denar deposits took the leading role in the currency structure of deposits with a share of 50.7% for the first time since 2007. 

At the session, the National Bank Council was also informed on the recent macroeconomic developments and it was ascertained that the continuation of uncertainty about the euro area crisis protracted the unfavorable trends of the economic activity. Taking into account the high trade integration of the Macedonian economy into the euro area, the poor economic performances and the deteriorated forecasts for the euro area still indicate lower foreign effective demand for Macedonian products and relatively weaker economic activity. Observing the main indicators relevant for the monetary policy, in September, the inflation indicator was higher than projected, given the faster increase of food prices than expected. Taking into account that the inflation accelerated due to factors on the supply side, it is not expected to affect the foreign exchange market trends. Recent monetary data indicate slightly slower monetary and credit growth than expected. As a result of the real sector developments and perceptions for the current global risks and their influence on the domestic economy, banks remain prudent and at present, credit growth is still moderate. In the external sector, the balance of payments position provides maintenance of the foreign reserves at adequate level that ensures an ample space as a buffer for any adverse shocks. The National Bank monitors the economic trends regularly, and takes necessary measures.  

For precise definition of bank risks, the Council has discussed and adopted a Decision on amending the Decision on credit risk management and a Decision on amending the Decision on exposure limits. These amendments refer to credit exposures to clients enjoying a speculative rating and exposure to clients without any credit rating registered in countries with low credit rating or without any credit rating. Besides changes in the claim classification by the credit rating of a client, the amendments also provide for exclusion of exposures to specific categories of clients from the general method for calculation of exposure limits on a net basis. 

At today's session, the Council has discussed and adopted a new Decision on currency exchange operations. The need for adoption of a new decision aroused by the numerous amendments made to the existing decision and the volume of amendments now proposed. The new Decision on currency exchange operations allows liberalization in the submission of documentation required for currency exchange license and in the additional requirements to be met by a currency exchange operator to commence conducting currency exchange operations. Such facilitations for the currency exchange operators are expected to ensure greater efficiency in this intermediation activity. 

The Council has discussed and adopted the NBRM Audit Regulation. The adoption of such Regulation provides for achievement of the three relevant qualitative characteristics of the NBRM Audit Committee such as operational independence, open lines of communication and clearly defined roles and responsibilities. 

The Council was also informed on current issues concerning the National Bank operations. 

Governor's Office