Mongolian economy decreased by 9.7% in the first half of 2020 due to Covid-19. It has also affected the banking sector. In the first quarter of this year, loan disbursement fell by 2%. It fell by 11% in the second quarter. Current account balance decreased by 9%. Deposit secured loan increased by 3% due to income decrease of citizens. Average interest rate of bank deposit reached to 11% which is the lowest in the history.
Citizens expect that USD rate will increase due to export delay and the upcoming parliamentary election in rural area. Related to this, individuals and corporates are converting their MNT deposits to USD. And 29% total deposit turned to USD. Total foreign currency deposit increased by 48%, 16% in total.
Central Bank of Mongolia took measures such as suspending foreign exchange transactions of individuals and corporates, banning interest on current accounts, and suspending foreign currency deposit insurance.
The Mongolian Banking Association has concluded that the US dollar will remain stable and the growth of foreign currency deposits will slow down as there are no large foreign payments to be made until May, 2021.
Past due loan reaches MNT 1 trillion
As of first half of 2020, total loans amount equals to MNT 17.3 trillion which decreased by 4.6%. Consumer loans (car and electric appliance leasing) decreased by 17%. But past due loan increased by 23% and 34% which reached to MNT 1 trillion. It equals to 5.8% of total loan outstanding.
Individual past due loan increased by 21% and corporate past due loan increased by 41%. Furthermore, one in three mining loans and one in five loans at transportation sector are default loan. Until the end of this year, borrowers were given the opportunity to freeze their loans. Default loan will increase after this decision period ends.
Mongolian economy decreased by 9.7% in the first half of 2020 due to Covid-19. It has also affected the banking sector. In the first quarter of this year, loan disbursement fell by 2%. It fell by 11% in the second quarter. Current account balance decreased by 9%. Deposit secured loan increased by 3% due to income decrease of citizens. Average interest rate of bank deposit reached to 11% which is the lowest in the history.
Citizens expect that USD rate will increase due to export delay and the upcoming parliamentary election in rural area. Related to this, individuals and corporates are converting their MNT deposits to USD. And 29% total deposit turned to USD. Total foreign currency deposit increased by 48%, 16% in total.
Central Bank of Mongolia took measures such as suspending foreign exchange transactions of individuals and corporates, banning interest on current accounts, and suspending foreign currency deposit insurance.
The Mongolian Banking Association has concluded that the US dollar will remain stable and the growth of foreign currency deposits will slow down as there are no large foreign payments to be made until May, 2021.
Past due loan reaches MNT 1 trillion
As of first half of 2020, total loans amount equals to MNT 17.3 trillion which decreased by 4.6%. Consumer loans (car and electric appliance leasing) decreased by 17%. But past due loan increased by 23% and 34% which reached to MNT 1 trillion. It equals to 5.8% of total loan outstanding.
Individual past due loan increased by 21% and corporate past due loan increased by 41%. Furthermore, one in three mining loans and one in five loans at transportation sector are default loan. Until the end of this year, borrowers were given the opportunity to freeze their loans. Default loan will increase after this decision period ends.