Moody's Investors Service upgraded the long-term local currency deposit ratings of Golomt Bank LLC and Trade and Development Bank of Mongolia LLC (TDBM) to B3 from Caa1.
Moody's has also upgraded each bank's baseline credit assessment (BCA) and adjusted BCA to b3 from Caa1. Counterparty Risk Assessment of each banks was upgraded to B2 from B3. According to Moody’s, outlook on all ratings is stable for both banks.
Moody’s view that their capitalization will remain at levels consistent with a BCA of B3 upon the completion of the Asset Quality Review (AQR). According to the International Monetary Fund and the Bank of Mongolia, the AQR found a relatively modest capital shortfall in the banking system, about 1.9 percent of GDP at the end of 2017 and a system-wide capital adequacy ratio of 13.7 percent at the end of 2017. While bank-level information was not made public, Moody's believes the two banks' capitalization will remain sufficiently stable to merit the upgrade of their BCAs to B3 from Caa1, given the better-thanexpected AQR results, and Golomt Bank reported CET1 ratio of 9.45 percent and TDBM reported CET1 ratio of 14.02 percent at the end of 2017.
While Moody’s expects loan growth to remain strong in 2018, the agency believes that the banks will have plans in place, including any capital raisings, if necessary, to ensure adequate capitalization is maintained by the end of December, according to the schedule laid out by the Bank of Mongolia.
The agency also believes that the banks will benefit from improving liquidity in Mongolia and the implementation of wide-ranging policy reforms targeted at improving economic fundamentals. For example, amendments to the Central Bank law, Banking law and deposit insurance law have been completed. Growth also remains strong in Mongolia, which will be supportive of bank asset quality. Mongolia reported real GDP growth of 5.1 percent in 2017.
Tugsbilig.B
Moody's Investors Service upgraded the long-term local currency deposit ratings of Golomt Bank LLC and Trade and Development Bank of Mongolia LLC (TDBM) to B3 from Caa1.
Moody's has also upgraded each bank's baseline credit assessment (BCA) and adjusted BCA to b3 from Caa1. Counterparty Risk Assessment of each banks was upgraded to B2 from B3. According to Moody’s, outlook on all ratings is stable for both banks.
Moody’s view that their capitalization will remain at levels consistent with a BCA of B3 upon the completion of the Asset Quality Review (AQR). According to the International Monetary Fund and the Bank of Mongolia, the AQR found a relatively modest capital shortfall in the banking system, about 1.9 percent of GDP at the end of 2017 and a system-wide capital adequacy ratio of 13.7 percent at the end of 2017. While bank-level information was not made public, Moody's believes the two banks' capitalization will remain sufficiently stable to merit the upgrade of their BCAs to B3 from Caa1, given the better-thanexpected AQR results, and Golomt Bank reported CET1 ratio of 9.45 percent and TDBM reported CET1 ratio of 14.02 percent at the end of 2017.
While Moody’s expects loan growth to remain strong in 2018, the agency believes that the banks will have plans in place, including any capital raisings, if necessary, to ensure adequate capitalization is maintained by the end of December, according to the schedule laid out by the Bank of Mongolia.
The agency also believes that the banks will benefit from improving liquidity in Mongolia and the implementation of wide-ranging policy reforms targeted at improving economic fundamentals. For example, amendments to the Central Bank law, Banking law and deposit insurance law have been completed. Growth also remains strong in Mongolia, which will be supportive of bank asset quality. Mongolia reported real GDP growth of 5.1 percent in 2017.
Tugsbilig.B